Final answer:
An engineered cost is directly related to the production process, while a discretionary cost can be adjusted or eliminated at management's discretion.
Step-by-step explanation:
An engineered cost is a cost that is directly related to the production process and is essential for producing a product or delivering a service. It includes expenses such as raw materials, labor, and equipment. On the other hand, a discretionary cost is a cost that is not directly tied to the production process and can be adjusted or eliminated at the discretion of management, such as advertising expenses or employee training.
For example, if a car manufacturer needs to purchase steel to make the car bodies, the cost of the steel would be considered an engineered cost. However, if the manufacturer decides to invest in a new marketing campaign, the cost of the campaign would be a discretionary cost.