Committed fixed costs differ from discretionary fixed costs primarily in that committed fixed costs:
- Arise from long-term capacity decisions and cannot be easily altered in the short run (correct answer)
- Are budgeted each period and can be adjusted up or down based on management's spending preferences
- Vary with output volume within the relevant range of production activity
- Are assigned to products using cost driver rates established at the start of the period
Explanation: Committed fixed costs result from past decisions about long-term capacity - such as plant and equipment, lease obligations, and key personnel contracts. They cannot be significantly reduced in the short term without fundamentally changing the organization's capacity. Option B describes discretionary fixed costs, which are set annually through the budgeting process and can be changed relatively quickly (e.g., advertising, training, R&D). Option C describes variable costs, not fixed costs. Option D describes the mechanics of predetermined overhead allocation, which applies to both fixed and variable overhead.