ABC Company reported the following cost information: June July Cost A $16,380 $25,160 Cost...

Question:

ABC Company reported the following cost information:

June July
Cost A $16,380 $25,160
Cost B $55,440 $89,760
Cost C $37,380 $37,380
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.

=55,4400*68,000/42,000

=$89,760

Cost A is mixed because the cost varies however not proportionally to the number of units produced.

=16,380 *68,000/42,000

=$26,520

  • This is different than $25,160.

The answer is thus A.


Learn more about this topic:

Loading...
Mixed Costs: Definition & Examples

from Intro to Business: Help and Review

Chapter 1 / Lesson 10
9.2K

Related to this Question

Explore our homework questions and answers library