The greatest degree of control for committed fixed costs is exerted
A)in the post-investment audit.
B)during the life of the investment.
C)prior to acquisition.
D)by equipment operators.

Question

Quizplus · Accepted Answer

Committed fixed costs refer to expenses that cannot be adjusted easily, such as the cost of acquiring assets or buildings. The greatest degree of control for committed fixed costs is exerted prior to the acquisition, as this is when decisions about what investments to make and what assets to acquire are being made. Once the investment has been made, the committed fixed costs become sunk costs, and their level of control decreases. Therefore, the best choice is option C, prior to acquisition.

The Greatest Degree of Control for Committed Fixed Costs Is