Question

XYZ Confectionary has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost with respect to the stores?
a. store manager salaries
b. store building depreciation expense
c. the cost of corporate advertising aired during the Super Bowl
d. cost of goods sold at each store
e. none of the above

Answer 1

Answer: c. the cost of corporate advertising aired during the Super Bowl

Explanation:

Commmon fixed cost simply means the cost that cannot be traced to a single department.

From the options given, it can be noted that the store manager salaries, store building depreciation expense and the cost of goods sold at each store can be identified separately for the stores.

On the other hand, the cost of corporate advertising aired during the Super Bowl is used for the promotion of the entire company, therefore, it's the common fixed cost.