QUESTION: 269 Topic 5: Part 2 Sec Five (258 to 317)

"Discretionary costs" are

Costs which management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers.
Costs which are likely to respond to the amount of attention devoted to them by a specified manager.
Costs which are governed mainly by past decisions that established the present levels of operating and organizational capacity and which only change slowly in response to small changes in capacity.
Costs which will be unaffected by current managerial decisions.

Answer(s): A

Explanation:

Discretionary costs are those that are incurred in the current period at the "discretion" of management and are not required to fill orders by customers.

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QUESTION: 270 Topic 5: Part 2 Sec Five (258 to 317)

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"Controllable costs" are

Costs which management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers.
Costs which are likely to respond to the amount of attention devoted to them by a specified manager.
Costs which fluctuate in total in response to small changes in the rate of utilization of capacity.
Costs which will be unaffected by current managerial decisions.

Answer(s): B

Explanation:

Controllable costs can be affected by the efforts of a manager.

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QUESTION: 271 Topic 5: Part 2 Sec Five (258 to 317)

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Which of the following is the best example of a variable cost?

The corporate president's salary.
Cost of raw material.
Interest charges.
Property taxes.

Answer(s): B

Explanation:

Variable costs vary directly with the level of production. As production increases or decreases, material cost increases or decreases, usually in a direct relationship.

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