Homework Answers
Answer is as follows:
Correct Option : Committed Fixed Cost
Commited Fixed Costs are those costs that a company has incurred already or they have obligation to incur such costs in future.
Commited Fixed Costs generally arise as a part of agreement or contract.
Generally these costs are associated with long term contracts, usually more than one year.
In the given case, there entered a contract for 5 years. Thus this shows that it is a committed fixed cost.
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