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Fixed, Variable and Mixed Costs

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You have been studying 'fixed' costs. You learned that a number of 'fixed' costs are actually mixed costs (variable and fixed). Write a two paragraph memo to your manager explaining some of the cost estimation techniques that can help determine the fixed and variable portion of each mixed cost (such as utility costs and maintenance costs). Your response should NOT be limited to just the definitions of fixed, variable, and mixed costs.

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Solution Summary

This problem talks about the techniques of cost estimation. It also gives you a memo discussing the differences between fixed, variable and mixed costs.

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In our company there are several costs that are mixed costs. In other words, these are a combination of fixed and variable costs. Fixed costs are those costs that do not vary with the volume of production; on the other hand variable costs are those costs that vary with production. In this ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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