In a responsibility income statement, the term common fixed costs describes fixed costs that:
A) Occur every month.
B) Jointly benefit several responsibility centers of the business.
C) Occur in virtually every responsibility center of the business (such as salaries).
D) Are easily traceable to specific profit centers.

Question

Quizplus · Accepted Answer

Common fixed costs are fixed costs that benefit more than one responsibility center of the business. These costs cannot be easily allocated to a specific profit center, and are not limited to occurring every month. Examples may include rent for a building used by multiple departments or salaries for executives who oversee multiple divisions.

In a Responsibility Income Statement, the Term Common Fixed Costs