A mixed cost contains a variable element and a fixed element.
Option a
<u>Explanation:</u>
Mixed costs are those costs that has both variable and fixed component. Example: operating cost of a machinery includes fixed costs that cannot be changed with other variable costs like fuel, insurance, depreciation, etc.
It is also named as semi-variable costs. And the formula to calculate mixed cost is as follows,
where,
- y is the "total cost "
- a is the "fixed cost per period"
- b is the "variable rate per unit of activity"
- x is the "number of units of activity"