Wysocki Company pays its sales force a fixed salary plus a 5% commission on all sales. Explain why sales force costs would be considered a mixed cost. Explain how mixed costs are related to both fixed and variable costs.
A fixed cost is a cost which does not vary over the relevant range. (The relevant range is the range over which certain cost relationships exist in a predictable fashion.) A variable cost is one which varies according to a level of activity over the relevant range. This "activity" may be sales, machine ...
This solution explains why a sales force cost paid as a salary plus commission would be considered a mixed cost. It then explains how mixed costs are related to both fixed and variable costs.