Define discretionary and committed fixed cost with example.

Expert Solution

Discretionery Fixed cost: It is a cost which is not incurred due to any commitment,it is incurred by the company due to its own discretion.It is not a compulsory cost . It is decided by management of the Company as per its own discretion in the policies of the company.For Example if the Company set in its policies that it incurred $100000 each year for employees training programme,$50000 incurred for research and development,$30000 for advertising expenses etc.This amount can be changed by management on the basis of changing requirements.

Committed cost is a cost which is incurred due to written or oral commitment .Committed Fixed cost are required to pay by the Company each year.For Example as per Rent agreement ,Company are required to pay $50000 per month for Rent of Machinery,Building etc. Salaries of the Emplyees are also fixed as per appointment letter .Depreciation Expense (rates as per law ). These amounts are fixed Company’s management cannot change these amounts.

ekkarill92 answered 2 years ago

Explain the difference between committed fixed costs and discretionary fixed costs and give an example of...

Explain the difference between committed fixed costs and discretionary fixed costs and give an example of each. Why are more and more organizations in both manufacturing and nonmanufacturing industries adopting activity-based costing systems?

1–9 Distinguish between discretionary fixed costs and committed fixed costs.

1–9 Distinguish between discretionary fixed costs and committed fixed costs.1–10 Does the concept of the relevant range apply to fixed costs? Explain.1–11 What is the difference between a traditional format income statement and a contribution format income statement?

discretionary fixed cost

The following are different categories of costs: Variable, Fixed (committed), Fixed (discretionary), and Mixed. Identify what...

The following are different categories of costs: Variable, Fixed (committed), Fixed (discretionary), and Mixed. Identify what type of cost is best represented by the following examples of costs and briefly explain why. The answer to the first one, Rent, is provided as an example: Rent is a fixed, committed cost because it does not change due to differences in activity levels. In other words, rent is always a cost that will be due regardless of business activity level. It is...

What is the difference between discretionary versus non-discretionary fixed costs, and can they be changed? Explain

Define the following: fixed cost, variable cost, marginal cost and marginal revenue

Define the following terms and/or write the formula if available: Fixed input (Give one example) Fixed...

Define the following terms and/or write the formula if available: Fixed input (Give one example) Fixed cost Variable input (Give one example) Variable cost Total cost Sunk cost (Give one example) Average fixed cost Average variable cost Average total cost (or average cost)

which of the following is an en example of fixed cost? labor cost associated with the...

which of the following is an en example of fixed cost? labor cost associated with the production of a new product shipping cost associated with the sale of a new product coat of equipment purchased for an assembly line to be used in the production kf a new product assembly costs associated with the production kf a new product

1-Define cost Accounting and enlist 10 example of product cost with explanation? 2-Define period cost and...

1-Define cost Accounting and enlist 10 example of product cost with explanation? 2-Define period cost and enlist 10 examples with explanation? 3-Define variable cost, fixed cost and mixed cost and enlist 10 examples of each category with explanation? 4-Define Sunk cost and opportunity cost and enlist 10 examples of each cost with explanation? 5- develop one numerical question from yourself and then find variable cost, fixed cost and total cost by using equation (Y=a + bx) with high low method...

One advantage of equity financing is that the corporation is not committed to a fixed cash...

One advantage of equity financing is that the corporation is not committed to a fixed cash payout. It can pay dividends when money becomes available. Yet many managers are reluctant to issue equity because of its dilutive effect on EPS, share value, and ownership. Additionally, the market may respond negatively to the announcement of an equity issue. Fully explain these concerns.

Question