Which of the Following Is True of Discretionary Fixed Costs

question 162

Multiple Choice

Which of the following is true of discretionary fixed costs?

• A) They are used to calculate contribution margin.
• B) They depend on the number of units produced.
• C) They can be changed easily by management's decision.
• D) They increase as output increases.

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Definitions:

Inventoriable Costs

Costs associated with the purchase or production of goods that are considered assets when incurred and expensed as the goods are sold.

Period Costs

Expenses that are not directly tied to the production of goods and are instead allocated to the time period in which they are incurred.

Controllable Costs

Expenses that a manager or business unit has the authority to influence or change in the short term.

Product Costs

Costs that are directly associated with the manufacturing of goods including materials, labor, and overhead.