An example of a committed fixed cost would be:
a) taxes on real estate
b) management development programs
c) public relations
d) advertising programs
taxes
a) taxes on real estate
An example of a committed fixed cost would be:
a) taxes on real estate
Committed fixed costs are expenses that a company must continue to pay regardless of the level of production or sales. Taxes on real estate are an example of a committed fixed cost because they are required payments that a company needs to make regardless of the company's performance or production levels. These taxes are often based on the assessed value of the company's real estate and are typically non-negotiable.
To determine which option is an example of a committed fixed cost, we first need to understand what committed fixed costs are. Committed fixed costs are expenses that a company has to pay regularly, regardless of its level of production or sales. They are usually long-term in nature and difficult to reduce or eliminate without significant consequences.
Option a) taxes on real estate: Taxes on real estate are considered a committed fixed cost because they are a recurring expense that a company has to pay regardless of its level of production or sales. These taxes are based on the value of the property and are typically fixed or predictable in nature.
Option b) management development programs: Management development programs are not typically considered committed fixed costs. They are often classified as discretionary or variable costs because companies have more control over whether or not to invest in these programs, and the level of investment can vary based on the company's needs and financial situation.
Option c) public relations: Public relations expenses are usually discretionary or variable costs. Companies have more flexibility in deciding the level of investment in public relations activities, such as media campaigns or events, based on their current circumstances and goals.
Option d) advertising programs: Advertising programs are generally considered discretionary or variable costs. Companies have the ability to adjust their advertising spending based on their marketing objectives, budget constraints, and market conditions. The level of investment in advertising can vary significantly depending on factors like product launches, promotional campaigns, and market competition.
After analyzing the options, the example of a committed fixed cost would be option a) taxes on real estate.