A mixed cost includes a fixed component and a variable component.

A mixed cost includes a fixed component and a variable component.

• A. False
• B. True
• C. Not enough information
• D. It depends

Answer: (B)

A mixed cost, also called a semi-variable cost, contains two parts: a fixed portion that does not change with activity and a variable portion that does. The total cost can be written as C = F + vQ, where F is the fixed component, v is the variable cost per unit, and Q is the level of activity. Because of this structure, a mixed cost always has both a fixed and a variable element, even if you don’t know their exact values yet. So the statement is true. A simple example is a utility bill with a base charge plus a charge per unit consumed. The fixed portion remains even if usage is zero, and the variable portion grows with usage. The other options don’t fit: stating it is false ignores the defining dual components; saying not enough information would be incorrect because the concept of a mixed cost already asserts the presence of both components; saying it depends would be inaccurate because the descriptive nature of a mixed cost is not conditional on data.

A mixed cost, also called a semi-variable cost, contains two parts: a fixed portion that does not change with activity and a variable portion that does. The total cost can be written as C = F + vQ, where F is the fixed component, v is the variable cost per unit, and Q is the level of activity. Because of this structure, a mixed cost always has both a fixed and a variable element, even if you don’t know their exact values yet.

So the statement is true. A simple example is a utility bill with a base charge plus a charge per unit consumed. The fixed portion remains even if usage is zero, and the variable portion grows with usage.

The other options don’t fit: stating it is false ignores the defining dual components; saying not enough information would be incorrect because the concept of a mixed cost already asserts the presence of both components; saying it depends would be inaccurate because the descriptive nature of a mixed cost is not conditional on data.