An example of a committed fixed cost for a clothing manufacturer is
A)An annual contract for television advertising cost.
B)A 10-year lease on an office building.
C)Yards of fabric used.
D)None of these ans choices are correct.

Question

Quizplus · Accepted Answer

A 10-year lease on an office building is a committed fixed cost for a clothing manufacturer as it is a long-term commitment to pay rent for the building, regardless of how much clothing is produced or sold. An annual contract for television advertising costs is a period cost as it is only incurred for a specific time period and can be adjusted based on the level of production or sales. Yards of fabric used is a variable cost as it is dependent on the level of production.

An Example of a Committed Fixed Cost for a Clothing