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Determining the Fixed and Mixed Portion of Costs

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I have been studying the 'fixed' costs. I have learned that a number of 'fixed' costs are actually mixed costs (variable and fixed). However, I am still having trouble with answering the following question: Explain how you can determine the fixed and mixed portion of each cost (such as utility costs, maintenance costs) and why it is relevant to more accurately understanding the types of costs.

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Solution Summary

This solution of 120 words describes a method of separating the fixed and variable costs in mixed costs to analyze the change in cost between the high and low levels of activity. Several examples are provided, along with one reference.

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A method of separating the fixed and variable costs in mixed costs is to analyze the change in cost between the high and low levels of activity.

Example: The cost of operating an automobile includes some fixed costs ...

Solution provided by:
Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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