Question

As the level of activity increases, how will a mixed cost in total and per unit behave? In Tota Per UnitA) Increase DecreaseB) Increase IncreaseC) Increase No effectD) Decrease IncreaseE) Decrease No effect A. Choice A B. Choice B C. Choice C D. Choice D E. Choice E

Answer 1

Answer: Choice A

Explanation:

A mixed cost is a cost that consists of both the fixed and the variable component. An example is utility.

It should be noted that as the level of activity increases, the mixed cost in total will increase while mixed cost per unit will reduce. This is because there'll be an increase in unit which will ideally lead to reduction in the per unit while total mixed cost increase.