Which statement regarding fixed costs is true?
A)Discretionary fixed costs preserve management's flexibility.
B)Committed fixed costs preserve management's flexibility.
C)Both discretionary and committed fixed costs preserve management's flexibility.
D)Discretionary fixed costs limit management's flexibility.

Question

Quizplus · Accepted Answer

Discretionary fixed costs are those that can be adjusted or eliminated at management's discretion, therefore they preserve management's flexibility. On the other hand, committed fixed costs, which are long-term in nature and cannot be easily adjusted, may limit management's flexibility.

Which Statement Regarding Fixed Costs Is True