Which of the following is an example of a committed fixed cost?
A)investment in production facilities
B)advertising
C)preventive maintenance
D)employee training programs

Question

Quizplus · Accepted Answer

An investment in production facilities is a committed fixed cost as it is a long-term cost that cannot be easily adjusted in the short term. It is a necessary expense to ensure long term capacity and capability of the company.

Choice B, advertising, is typically considered a variable cost as it can be adjusted in response to changes in sales or marketing strategies.

Choice C, preventive maintenance, may be considered a fixed cost if it is done on a regular basis that is not impacted by changes in production levels or sales. However, if it is done on an as-needed basis, it may be considered a variable cost.

Choice D, employee training programs, may be considered a variable cost as it can be adjusted based on business needs and changes in personnel.

Which of the Following Is an Example of a Committed