A cost that has characteristics of both a variable cost and a fixed cost is called a
A) variable/fixed cost
B) mixed cost
C) discretionary cost
D) sunk cost

Question

Quizplus · Accepted Answer

A mixed cost is a cost that contains elements of both fixed and variable costs. The fixed portion of the cost is incurred regardless of the level of production or sales, and the variable portion of the cost fluctuates with the level of production or sales. Examples of mixed costs include utility bills, salaries of production supervisors, and maintenance costs. Option A is incorrect because a variable/fixed cost does not exist. Option C is incorrect because discretionary costs are costs that can be eliminated without affecting the overall operation of the organization. Option D is incorrect because sunk costs are costs that have already been incurred and cannot be recovered.

A Cost That Has Characteristics of Both a Variable Cost