Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Depreciation on existing equipment
A)Discretionary fixed cost
B)Committed fixed cost

Question

Quizplus · Accepted Answer

Depreciation is a committed fixed cost because it occurs regardless of the level of production or sales. It is a fixed cost because the amount of depreciation is predetermined and does not change with changes in production levels. Discretionary fixed costs, on the other hand, are costs that a company chooses to incur, such as advertising or employee training.

Select the Appropriate Classification of Each of the Costs Listed