Question

A cost that is incurred because of a long-range policy decision is known as a:

A. discretionary cost.
B. committed cost.
C. continuous cost.
D. standard cost.

Answer 1

A cost that is incurred because of a long-range policy decision is known as a committed cost. Committed costs are expenses that a business is obligated to pay as a result of previous decisions or agreements.

Step-by-step explanation:

A cost that is incurred because of a long-range policy decision is known as a committed cost. Committed costs are expenses that a business is obligated to pay as a result of previous decisions or agreements, such as fixed costs or contracts. For example, if a company decides to build a new manufacturing plant, the expenses associated with the construction and operation of the plant would be considered committed costs.