A cost that includes both fixed and variable cost components is called a:

A cost that includes both fixed and variable cost components is called a:

a) Mixed cost.

b) Step-variable cost.

c) Composite cost.

d) Curvilinear cost.

e) Differential cost.

Answer: a) Mixed cost.

This type of cost is also called a semi-variable cost or semi-fixed cost since this direction contains both fixed and variable costs. On this account, it can be described as a cost that does not change as the level of activity or output within a certain range and then changes as the activity or output increases above or drops below this range.

Examples of mixed costs are prevalent in, for instance, maintenance costs, which are made up of certain fixed costs, for instance, the cost of attendance of maintenance personnel, and variable costs that include among other things extra spare parts and materials used in maintenance activities which are dependent on the degree of maintenance required. Other examples include the cases of utilities, the cost of which is calculated with a fixed charge and an additional charge that depends on the quantities used, or supervisory salaries, which have a fixed component as well as a variable component that can be overtime or incentive pay.