Two primary types of fixed cost are

• committed fixed costs, which are associated with an organization’s basic infrastructure and are de¬ termined by long-run strategy'; examples include depreciation, lease payments, and property taxes.

• discretionary fixed costs, which are incurred for activities for which the level and nature are de¬

termined by management judgment; examples in¬ clude research and development, advertising, and employee training. LO.1