Discretionary Costs Reflect

question 95

Multiple Choice

Discretionary costs reflect:

• A) The costs that managers incur to purchase new production machines when the old machines need replacing.
• B) Decisions about the maximum amount that will be spent next period for activities such as travel and marketing.
• C) Decisions about the amount of variable costs that will be incurred next period.
• D) The costs that managers incur to pay overtime when production levels are high.

---

Definitions:

Rate of Return

The increase or decrease in the value of an investment during a specific timeframe, represented as a proportion of the investment's initial outlay.

Commodity

A basic good used in commerce that is interchangeable with other commodities of the same type; common examples include grains, gold, beef, oil, and natural gas.

Derivative Markets

Financial markets for instruments like futures, options, and swaps, whose value is derived from an underlying asset such as commodities, stocks, or currencies.

Business Risks

Business risks refer to the exposure a company or organization has to factors that will lower its profits or lead it to fail.