Since a mixed cost has both a fixed and a variable component,
A)neither total cost nor unit cost will vary with changes in the level of activity.
B)total cost will vary with changes in the level of activity, but unit cost will not.
C)unit cost will vary with changes in the level of activity, but total cost will not.
D)both the total cost and the unit cost will vary with changes in the level of activity.

Question

Quizplus · Accepted Answer

Since a mixed cost has both a fixed and a variable component, both the total cost and the unit cost will vary with changes in the level of activity. As the level of activity increases, the variable component of the mixed cost will increase, resulting in a higher total cost and a higher unit cost. Conversely, as the level of activity decreases, the variable component of the mixed cost will decrease, resulting in a lower total cost and a lower unit cost. Therefore, neither total cost nor unit cost will remain constant, making choice A and B incorrect, and unit cost will not remain constant, making choice C incorrect.

Since a Mixed Cost Has Both a Fixed and a Variable