Question

A mixed cost contains Select one:

Answer 1

A mixed cost contains a variable element and a fixed element.

Option a

Explanation:

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,

$y=a+b x$

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"