Question

(iv) Cost of staff services is an example of
(A) Committed Costs
(B) Policy and Managed Costs
(C) Discretionary Costs
(D) Step Costs​

Answer 1

Cost of staff services is an example of discretionary costs.

Discretionary costs refer to costs that can be reduced or completely done away with for a brief period without affecting the short-term profit earned by a business. This is usually lessened when there is a cash flow crunch or the company wants to project more earnings in a short period.

The cost of staff services such as staff training is one of the most popular discretionary costs or expenditures.

Answer 2

Answer:

Cost of staff services is an example of option

(A) committed costs.

Let's say if a company confirms a staff member or hires a permanent employee, then it is inevitable to incur expenditure for redundancy and this is the reason why such expenditures are classified as committed costs. Most of these costs also come with a long-term agreement.