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The following are different categories of costs: Variable, Fixed (committed), Fixed (discretionary), and Mixed.
Question 1: Identify what type of cost is best represented by the following examples of costs and briefly explain why.
The answer to the first one, Rent, is provided as an example: Rent is a fixed, committed cost because it does not change due to differences in activity levels. In other words, rent is always a cost that will be due regardless of the business activity level. It is generally considered a committed cost because once you sign the lease you are committed to pay rent for the life of the lease.
Rent: Answer explained aboveProperty taxes on land and buildingBillboard advertising campaignRaw materials used in the manufacturing processEmployee picnic with a band, food, and door prizes
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