Distinguish between 'committed fixed costs' and 'discretionary fixed costs'.

Distinguish between 'committed fixed costs' and 'discretionary fixed costs'.

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Distinction between committed fixed costs and discretionary costs

- Committed fixed costs are those fixed costs that arise from the possession of items such as
plant, building and equipment for example; depreciation for example salaries of staff.
- These costs remain unaffected by any short-term actions.

- Discretionary fixed costs (sometimes called managed costs or programmed costs). They are
rise form periodic (usually yearly) decision regarding maximize outlay to be incurred. They are
not tied to a clear cause - and-effect relationship between inputs and outputs. Examples include
advertising public relations, executive training, teaching, research and health-care. These costs
are controllable.

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marto answered the question on February 15, 2019 at 07:46

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