Question

Where a business has entered into a binding contract to spend money in the​ future, this is referred to as which one of the​ following?

A. Committed cost
B. Opportunity cost
C. Contracted cost
D. Binding cost

Answer 1

A business's future binding financial commitment as per a contract is referred to as a Committed cost.

Step-by-step explanation:

When a business has entered into a binding contract to spend money in the future, the commitment is referred to as a Committed cost. This is not to be confused with an opportunity cost, which is the value of the next best alternative given up to obtain something else. A contracted cost is a fixed financial obligation that the company has formally agreed upon and must fulfill as per the terms of the contract. It does not have variability and is not normally subject to change once agreed upon.