Which Statement Regarding Committed and Discretionary Fixed Costs Is True

question 40

Multiple Choice

Which statement regarding committed and discretionary fixed costs is true?

• A) Both discretionary and committed fixed costs preserve flexibility.
• B) Both discretionary and committed fixed costs limit flexibility.
• C) Discretionary fixed costs preserve management's flexibility.
• D) Committed fixed costs preserve management's flexibility.

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Definitions:

Similarities

Aspects or characteristics that are alike between two or more entities or objects.

Consolidated Financial Statements

Financial statements that show the combined financial position and results of operations of a parent company and its subsidiaries.

Combined Reporting

A method used in corporate taxation that combines the tax reports of related companies into one comprehensive report.

Corporation

A legal entity that is separate and distinct from its owners, capable of owning assets, incurring debts, and entering into contracts.