Committed cost
A committed cost is a future obligation arising from an earlier decision, such as a signed lease or employment arrangement. Its relevance depends on whether the alternatives can change the payment, cancellation penalty or other consequence. A cost that must be paid unchanged is irrelevant to that comparison, but an avoidable termination payment can be relevant. Committed does not mean already paid, nor does it remove the need to check contractual and operational facts.
Worked example
A non-cancellable lease costs $10,000 under either option. If a third option allows termination for $2,000, compare that fee and the resulting saved payments explicitly.
Common mistake
Do not confuse a future committed payment with a sunk payment already incurred, or assume every commitment is legally impossible to alter.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | PM | Direct | September 2026–June 2027 |
