Question

The costs associated with a company’s basic facilities, equipment, and organization are known as:

a) committed fixed costs;
b) discretionary fixed costs;
c) mixed costs;
d) variable costs.

Answer 1

Committed fixed costs are expenditures that remain constant regardless of a company's level of production, including costs like rent and machinery.

Step-by-step explanation:

The costs associated with a company’s basic facilities, equipment, and organization are known as committed fixed costs. These are expenditures that do not change regardless of the level of production. Whether a company produces a lot or a little, these costs remain the same. Fixed costs may include rent on a factory or retail space, as well as the cost of machinery or equipment needed to produce a product. They are considered sunk costs in the short run since they cannot be altered once they have been incurred.