When operations are interrupted or cut back, committed fixed costs are cut in the short term because the costs of restoring them later are likely to be far less than the short$-$run savings that are realized.

II$.$ The cost of napkins put on each person's tray at a fast food restaurant is a variable cost with respect to how many persons are served.

III. Committed fixed costs represent organizational investments with a one$-$year planning horizon.

IV$.$ The following costs are all examples of committed fixed costs: depreciation on buildings, salaries of highly trained engineers, real estate taxes, and insurance expenses.

Multiple Choice

Only statement III is true.

Both statement I and II are true.

Both statement II and IV are true.

All statements are true.