In an ABC system, committed costs:
A)Vary with capacity levels
B)Vary with activity levels
C)Should not be included in ABC cost pools
D)Are related to capacity

Question

Quizplus · Accepted Answer

Committed costs are fixed costs and are related to the capacity of the organization. They are not affected by changes in activity levels and should be allocated to cost objects separately from variable costs. Therefore, choice D is the best answer.

In an ABC System, Committed Costs