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Discretionary fixed costs usually arise from annual decisions by management to spend on certain fixed cost items. Examples of discretionary costs are advertising, insurance premia, machine maintenance, and research & development expenditures. Discretionary fixed costs can be expensive. [4]
Here are some examples that can help you better understand discretionary spending and some easy ways to reduce these non-essential expenditures. 1. Dining out at restaurants or ordering takeout.
For example, you may be paying $2,000 every month in rent, mortgage or total cost of living. Some fixed expenses are also paid annually, bi-annually or quarterly.
Discretionary spending requires an annual appropriation bill, which is a piece of legislation. Discretionary spending is typically set by the House and Senate Appropriations Committees and their various subcommittees. Since the spending is typically for a fixed period (usually a year), it is said to be under the discretion of the
Third-party reimbursement of health care costs by public and private insurance programs provided few incentives to control costs until the 1980s. The introduction of Medicare's prospective payment system for hospitals in 1983 and the increasing share of Health Maintenance Organizations in the mid-1980s helped to slow down health care costs. [ 3 ]
Here’s an example. The ABC Company makes widgets. The company has fixed costs of $10,000 per month. Each widget costs the company $3.00 to make, and it sells each widget for $5.00.
Discretionary spending will fall again to $1,170.0 billion in 2014, a decrease of $42.8 billion or 3.6%. Discretionary spending will rise gradually from $1,170.0 in 2014 to $1,423.8 billion by 2023, an annual growth rate of 2.2% during the 2014 to 2023 period and 0.9% for the 2012-2023 period. The 2.2% growth rate approximates CBO's projected ...
Indirect costs are costs that are not directly accountable to a cost object (such as a particular project, facility, function or product). Like direct costs, indirect costs may be either fixed or variable. Indirect costs include administration, personnel and security costs. These are those costs which are not directly related to production.