Which of the Following Would Be Considered a Committed Fixed

question 73

Multiple Choice

Which of the following would be considered a committed fixed cost (a cost that is incurred regardless of the level of activity during the period) ?

• A) depreciation expense
• B) bad debt expense
• C) advertising expense
• D) cost of goods sold

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overheads, representing the expenses to convert raw materials into finished goods.

Factory Overhead Costs

Expenses related to the operation of a factory that are not directly linked to a specific product, such as maintenance, utilities, and salaries of supervisory staff.

Direct Material

The raw materials that are used directly in manufacturing a product and can be easily traced to the final product.

Factory Overhead

Indirect costs incurred during the manufacturing process, not including direct materials or direct labor.