Which of the following would be considered a discretionary fixed cost?
A) Property taxes and insurance
B) Depreciation
C) Employees wages
D) Advertising

Question

Quizplus · Accepted Answer

Discretionary fixed costs are those that can be adjusted or eliminated at the discretion of the management. Advertising is a perfect example of discretionary fixed costs because it is an expense that can be reduced or increased, depending on the company's financial situation. The other options listed are not discretionary fixed costs. Property taxes and insurance are mandatory costs that the company must pay, while depreciation is a non-cash expense that is associated with the wear and tear of fixed assets. Finally, employees' wages are usually considered a variable cost, which means that the company must pay its employees before calculating its net profits.

Which of the Following Would Be Considered a Discretionary Fixed