What is a mixed cost?

A mixed cost, also known as a semi-variable cost, contains both a fixed and a variable component. This means that a portion of the cost remains constant regardless of the level of activity, while another portion fluctuates with changes in activity.

• Fixed Cost Component: This is the base cost incurred even when there is no production or activity. For example, a minimum monthly fee for a utility service. See more about <a href="https://www.wikiwhat.page/kavramlar/Fixed%20Cost" >Fixed Cost</a>.

• Variable Cost Component: This portion changes proportionally with the level of activity. For instance, the cost of electricity used, which increases with more machine operation. For details on <a href="https://www.wikiwhat.page/kavramlar/Variable%20Cost" >Variable Cost</a>.

Understanding mixed costs is important for accurate cost analysis and decision-making. Businesses often use techniques like the <a href="https://www.wikiwhat.page/kavramlar/High-Low%20Method" >High-Low Method</a> or regression analysis to separate the fixed and variable components of a mixed cost.

Example: A sales person's compensation package might include a fixed monthly salary (fixed cost) plus a commission based on sales volume (variable cost).

Related Concepts: <a href="https://www.wikiwhat.page/kavramlar/Cost%20Accounting" >Cost Accounting</a>, <a href="https://www.wikiwhat.page/kavramlar/Cost-Volume-Profit%20Analysis" >Cost-Volume-Profit Analysis</a>.