Mixed Costs

The video tutorial explains mixed costs, which combine fixed and variable costs. It provides an example using rent and utilities to illustrate how these costs are intertwined. The tutorial describes the high-low method for calculating mixed costs and suggests regression analysis for more accurate results. The focus is on understanding the relationship between fixed and variable components in cost accounting.

What is a mixed cost?

• A cost that is entirely variable

• A combination of fixed and variable costs

• A cost that is entirely fixed

• A cost that changes randomly

Why are mixed costs categorized together?

• Because they are always different

• Because they are easy to calculate

• Because they are always the same

• Because they are inextricably tied together

What is the high-low method used for?

• To calculate only fixed costs

• To find the average cost

• To determine the relationship between fixed and variable costs

• To calculate only variable costs

What is a limitation of the high-low method?

• It is only applicable to fixed costs

• It requires a lot of data points

• It is too simple to use

• It is not accurate unless used over time

What does regression analysis provide in the context of mixed costs?

• A method to ignore variable costs

• A random guess of costs

• A line of best fit for data points

• An exact calculation of costs