What is committed fixed cost?

Accounting Dec 17, 2020

Expert Solution

Committed fixed costs refer to the actual and necessary expenses a business needs to function smoothly. Discretionary fixed costs are the opposite. These expenses are unnecessary and usually temporary in nature. A committed fixed cost cannot be simply eliminated when appropriating the budget for the business. Committed fixed costs could include utility bills, the purchase of materials, and expenses related to the procurement and maintenance of machinery.

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