Which statement best describes a committed fixed cost?
A) It can be easily changed.
B) It includes direct materials.
C) It changes when output changes.
D) It often involves a long-term contract.

Question

Quizplus · Accepted Answer

A committed fixed cost is a fixed cost that is established by long-term contracts or agreements, and it cannot be easily changed. It does not vary with changes in output and may include items such as rent and salaries. Direct materials are considered variable costs, as they depend on the level of production.

Which Statement Best Describes a Committed Fixed Cost