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A variable cost's overall variation is directly correlated with variations in the activity level. A fixed cost is one that doesn't fluctuate overall despite variations in the degree of activity. Both variable and fixed cost components are present in a mixed cost.

a) Variable cost

  • Changes in total, in coordinate extent to changes within the level of action. The overall cost increases/decreases as units made increases/decreases.
  • Variable fetched is consistent on the off chance that communicated on a per unit premise.
  • Coordinate fabric, coordinate labor, and variable overhead are all variable costs.
  • Costs that vary with sales, such as deals commission are variable costs.

b) Fixed cost

  • Total cost does not alter with changes within the volume of movement (inside a significant extend).
  • The cost per unit will alter as the number of units alter. Lease, protections, regulatory compensations are cases of fixed costs.
  • These costs don't alter fair since you make or offer one more unit as long as you remain inside the significant run.
  • A common illustration of a fixed cost is lease.

C) Mixed cost

  • A cost that has the characteristics of both variable and fixed cost is called blended or semi-variable cost.
  • One that contains both variable and fixed costs elements; Fixed – a least fetched of having a benefit prepared and accessible for use, Variable – fetched brought about for genuine utilization of the service, Total Blended Costs = Add up to fixed Cost $ + (Variable Cost $ per movement x # of the movement.

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