What Is A Discretionary Cost?

What is a discretionary fixed cost?

A discretionary fixed cost is an expenditure for a period-specific cost or a fixed asset, which can be eliminated or reduced without having an immediate impact on the reported profitability of a business.

The following can be considered discretionary fixed costs: Advertising campaigns.

Employee training..

What does discretionary spending mean?

Discretionary spending refers to non-essential items, such as recreation and entertainment, that consumers purchase when they have enough income left over after paying the necessary expenses such as the mortgage and utilities.

What types of items will your discretionary spending cover?

Discretionary income is the amount of an individual’s income that is left for spending, investing, or saving after paying taxes and paying for personal necessities, such as food, shelter, and clothing. Discretionary income includes money spent on luxury items, vacations, and nonessential goods and services.

Is salary a committed fixed cost?

Examples of committed costs include depreciation, rent, supervisor’s salaries, property taxes and depreciation.

What is another word for discretionary income?

End of dialog window….What is another word for discretionary spending?disposable incomediscretionary incomedisposable personal incomediscretionary expenses

What is discretionary vs non discretionary?

Simply put, a discretionary account is one in which a broker makes trades, buying or selling securities, in an investor’s account without the investor’s approval. A non-discretionary account is one in which the investor decides on what trades to make.

Which is the largest item in discretionary spending?

Discretionary Spending The rest must pay for all other domestic programs. The largest of these programs are Health and Human Services, Education, and Housing and Urban Development.

What does the word discretionary mean?

1 : left to individual choice or judgment : exercised at one’s own discretion discretionary powers. 2 : available for discretionary use discretionary income.

Is repair and maintenance a discretionary expense?

A discretionary cost is a cost or capital expenditure that can be curtailed or even eliminated in the short term without having an immediate impact on the short-term profitability of a business. … Examples of discretionary costs are: Advertising. Building maintenance.

What is an example of a discretionary expense?

Discretionary expenses are often defined as nonessential spending or, in other words, wants rather than needs. This means a business or household is still able to run even if all discretionary consumer spending stops. Meals at restaurants and entertainment costs are examples of discretionary expenses.

Is Depreciation a discretionary fixed cost?

Examples Examples of committed fixed costs include depreciation of machinery, insurance of premises and machinery, rental of premises, maintenance costs etc. Examples of discretionary fixed costs include advertising costs, public relations expenses, employee training and development costs etc.

What are step variable costs?

A step variable cost is a cost that generally varies with the level of activity, but which tends to be incurred at certain discrete points and involve large changes in amounts when such a point is reached. Conversely, a truly variable cost will vary continually and directly in concert with the level of activity.

Why are committed fixed costs the most difficult of the fixed costs to change?

Companies incur fixed costs — also known as overhead expenses — for doing business. … Committed costs, such as rent, are more difficult to change because businesses need these expenditures to maintain basic operations. For example, a restaurant needs to rent space and equipment before it can serve a single customer.

What’s another word for discretionary?

In this page you can discover 21 synonyms, antonyms, idiomatic expressions, and related words for discretionary, like: optional, arbitrary, left to discretion, discretional, changeable, judgmental, personal, elective, facultative, opinion and surprise.

Is rent a discretionary expense?

While rent, mortgage payments, and groceries are necessary, discretionary expenses are those you incur voluntarily such as dining out or cable television. Your discretionary spending budget is only as big as the income you have available to fund it.

Are car repairs a discretionary expense?

Variable expenses are defined as such because the amount you spend may vary each month. Although variable costs are quite often discretionary expenses, some may be necessities. Buying gas for your car each month is a variable expense, as are car repairs and maintenance. Grocery shopping is also a variable expense.

What are the four types of expenses?

You might think expenses are expenses. If the money’s going out, it’s an expense. But here at Fiscal Fitness, we like to think of your expenses in four distinct ways: fixed, recurring, non-recurring, and whammies (the worst kind of expense, by far).

Is an example of a discretionary fixed cost expense?

Examples of discretionary fixed costs include advertising, research, public relations, management development programs, and internships for students. Discretionary fixed costs can be cut for short periods of time with minimal damage to the long-run goals of the organization.

Does discretionary mean optional?

The difference between Discretionary and Optional When used as adjectives, discretionary means available at one’s discretion, whereas optional means not compulsory.

Who decides discretionary spending?

Discretionary spending refers to the portion of the budget that is decided by Congress through the annual appropriations process each year. These spending levels are set each year by Congress. This pie chart shows how Congress allocated $1.11 trillion in discretionary spending in fiscal year 2015.

Is military spending discretionary or mandatory?

The United States federal budget consists of mandatory expenditures (which includes Medicare and Social Security), discretionary spending for defense, Cabinet departments (e.g., Justice Department) and agencies (e.g., Securities & Exchange Commission), and interest payments on debt.