The formula for a mixed cost is
A) total cost = total variable cost +(fixed rate *amount of output).
B) total cost = total fixed cost + (variable rate * amount of output).
C) total cost = variable rate * amount of output.
D) None of these are correct.

Question

Quizplus · Accepted Answer

A mixed cost is a cost that has both fixed and variable components. The formula for a mixed cost is total cost = total fixed cost + (variable rate x amount of output). This means that the total cost is made up of a fixed cost component (which remains constant regardless of the level of output) and a variable cost component (which increases as the level of output increases). Choice A incorrectly adds the fixed rate to total variable cost, while choice C only includes the variable cost component. Choice D is self-explanatory as none of the options are correct.

The Formula for a Mixed Cost Is