Therefore, I want a price increase in the amount of overtime premium that I must pay. You have already recouped your fixed costs, so you are enjoying a hefty contribution margin on the sixth day, so quit complaining. Use sample estimates of costs in your explanation. The following statements were taken from a cost accounting text section covering the control of discretionary costs. It is a fixed cost, i.e., a period cost.
Committed costs are discretionary costs that have a long term horizon of commitment.
Discretionary costs must be monitored and eliminated when necessary. Managers who spend less than their current budget often find subsequent budgets reduced drastically. Terry knows that the home office does not have the expertise to evaluate the propriety of these purchases but will reduce next year's budget by asimilar amount if they are not spent this year. The All-Fixed Company is so named because all costs are fixed. They use air and river water to prepare industrial gases packaged in customer's containers.