Fixed costs that are the result of previous management decisions that current managers have no control over in the short run are called ________ fixed costs.
A)discretionary
B)committed
C)standard
D)past

Question

Quizplus · Accepted Answer

Committed fixed costs are fixed costs that are the result of previous management decisions and cannot be easily adjusted in the short run, such as long-term leases, salaries for top management, and investments in property and equipment. Discretionary fixed costs, on the other hand, are fixed costs that are the result of current management decisions and can be easily adjusted in the short run, such as advertising and research and development expenses. Standard fixed costs and past fixed costs are not commonly used terms in management accounting.

Fixed Costs That Are the Result of Previous Management Decisions