Question

Question 15: Some costs are mixed. What are some examples of mixed costs, and why would we want to separate them into fixed and variable cost components? How would we go about doing this task? Examples are great!

Answer 1

Mixed costs are those costs which consists of fixed costs as well as variable cost component in them. For example in case of vehicle expenditure per annum, it consists of mixed costs containing fixed components such as insurance, prarking fee, etc and some variable costs are fuel, salary for the driver for the number of hours worked etc. Both these costs are seperated in order to make decisions such as variable costs incurred if a particular used and the fixed costs still incurred if the vehicle is left unused. The break even points etc shall be found uning this analysis.