Why is it important to separate mixed costs into fixed and variable portions
A)Mixed costs perform like variable costs.
B)The accuracy of budgets may be reduced if mixed costs are fully allocated to either the fixed or variable cost pools.
C)Mixed costs need to be removed from consideration in budgeting.
D)Mixed costs perform like fixed costs.

Question

Quizplus · Accepted Answer

Separating mixed costs into fixed and variable portions is important because it allows for more accurate budgeting. If mixed costs are fully allocated to either the fixed or variable cost pools, the accuracy of budgets may be reduced. By separating out the fixed and variable portions, managers can better understand how costs will change with different levels of activity and make more informed decisions.

Why Is It Important to Separate Mixed Costs into Fixed