Which of the following is the best example of a discretionary fixed cost?
A) advertising
B) factory rent
C) direct materials
D) factory insurance

Question

Quizplus · Accepted Answer

Discretionary fixed costs are expenses that are considered to be "fixed" in the short term, but can be adjusted or eliminated in the long term. Advertising fits this description as it is a cost that a company may choose to spend money on in order to promote its products or services, but can also choose to reduce or eliminate if needed. Factory rent, direct materials, and factory insurance are all examples of fixed costs that are necessary for a company to continue its daily operations and cannot be easily adjusted or eliminated.

Which of the Following Is the Best Example of a Discretionary