Discretionary Costs, also known as Managed Costs, are those costs incurred as a result of managerial decisions where the extent of these costs is subject to managerial discretion. These costs often relate to specific amounts or follow a pre-determined formula, such as a percentage of sales revenue. Examples include advertising and research expenditure.
Managed costs are specific expenses that a company can control or influence through internal decisions, strategic planning, and efficient resource management. Careful handling of managed costs can significantly impact a company's operational efficiency and overall profitability.
