ABC Company reported the following cost information:
|Units sold||42,000 units||68,000 units|
Which of the above costs would be classified as a mixed cost?
What Is A Mixed Cost:
Although costs are generally classified as variable or fixed, in reality many costs are a combination of the two. This is the definition of a Mixed Cost (i.e. a cost that has both a variable and a fixed cost component and thus does not have a steady incremental cost).
Answer and Explanation:
Cost C is fixed because it does not vary.
Cost B is variable because the cost varies proportionally to the number of units produced.
Cost A is mixed because the cost varies however not proportionally to the number of units produced.
- This is different than $25,160.
The answer is thus A.
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from Intro to Business: Help and ReviewChapter 1 / Lesson 10