Managers often approximate curvilinear costs and step costs as mixed costs.

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Managers often approximate curvilinear costs (costs that are not linear, but instead increase or decrease at varying rates) and step costs (costs that increase in chunks when certain production or activity thresholds are met) as mixed costs. Mixed costs contain both fixed and variable elements, but when managers cannot readily separate the two, they may use a mixed cost approximation for these non-linear cost types.

Managers Often Approximate Curvilinear Costs and Step Costs as Mixed