Question

Instructions: Explain the differences between a traceable fixed cost and a common fixed cost. Provide examples of each. (MO 1) Please post your initial response by 23:59 PT Wednesday of Week 3, and comment on the posts of two classmates by 23:59 PT Sunday. Submission Instructions: Your initial post should be at least 200 words and should be supported by at least one scholarly source, other than the textbook. ou

Answer 1

Common fixed expenses are those expenses which are not related to a specific segment of the business, while the traceable fixed expenses are those expenses which are tied to a specific segment.

Traceable costs are allocated to their income statement of the related segment. Common fixed costs are not allocated to the segments income statement..

Common fixed costs arises due to overall operating activities and the traceable fixed costs arises due to existence of a particular segment.

Common fixed costs will not change if a segment is eliminated but the traceable fixed cost of that segment becomes nil if segment is eliminated.

Traceable fixed costs support only one segment of the business while the common fixed costs supports operation of more than one business.

Example of traceable fixed cost are :- Manager Salary in the Fritos segment of the PepsiCo is a traceable fixed cost to the Fritos segment of the business.

Example of common fixed costs :-Salary of the CEO of the PepsiCo company is a traceable fixed cost as it didn't related to specific segment of the business.