Which of the following would be considered a committed fixed cost?
A)Research and Development
B)Depreciation
C)Office holiday party
D)Advertising

Question

Quizplus · Accepted Answer

Committed fixed costs are those expenses that a company is obligated to pay, even if their level of production or sales decrease. Depreciation is a committed fixed cost because it is the allocation of the cost of a long-term asset over its useful life, regardless of the level of production or sales. Research and Development and Advertising are typically considered variable costs because they can be adjusted depending on the level of production or sales. The Office holiday party is a discretionary fixed cost, meaning it is a cost that a company chooses to incur, but can be adjusted or eliminated if necessary.

Which of the Following Would Be Considered a Committed Fixed