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A discretionary fixed cost is an expenditure for a period-specific cost or a fixed asset, which can be eliminated or reduced without having an immediate impact on the reported profitability of a business.onsequently, though these costs are classified as discretionary, they should only be reduced when it is absolutely necessary to do so. The following can be considered discretionary fixed costs: 1  Advertising campaigns. 2  Employee training. 3  Investor relations. 4  Public relations.
For instance, consider a simple manufacturing operation that has only 3 variable costs: raw materials, packaging and shipping, and workers' wages. 1  Imagine the costs incurred for the most recent year are as follows: $35,000 of raw materials, $20,000 of packaging and shipping, and $100,000 in employee wages. Rent, utilities, and administrative salaries are examples of fixed costs. 2  Whether you produce 1 unit or 10,000, these costs will be about the same each month. 3  Variable costs vary with production volume.