A hospital adds a new addition and needs to acquire some new equipment for the addition.The cost driver for the equipment is patient-days per month.The new addition increases the patient-days per month outside the relevant range.What type of equipment costs will change as a result of the addition?
A) discretionary fixed costs
B) discretionary variable costs
C) committed fixed costs
D) committed variable costs

Question

Quizplus · Accepted Answer

Committed fixed costs will change as a result of the addition, as they are directly related to the capacity of the hospital and will increase with the addition of new patients. Discretionary fixed costs may also be affected, but they are more under the control of management and may not necessarily change with increases in patient-days. Discretionary variable costs and committed variable costs are not directly related to the addition of a new facility and therefore are not likely to change in this scenario.

A Hospital Adds a New Addition and Needs to Acquire