The correct answer is: B. mixed cost
A mixed cost is a cost that has elements of both variable and fixed costs. It is also known as a semi-variable cost or a semi-fixed cost.
Variable costs are costs that change in direct proportion to changes in the level of output. For example, the cost of raw materials is a variable cost because it increases as the number of units produced increases.
Fixed costs are costs that do not change in the short run, regardless of the level of output. For example, the cost of rent is a fixed cost because it remains the same even if the number of units produced changes.
Mixed costs are costs that have both variable and fixed components. For example, the cost of electricity is a mixed cost because it includes a fixed component (the cost of the power plant) and a variable component (the cost of the electricity that is actually used).
The following are some examples of mixed costs:
- The cost of sales commissions
- The cost of advertising
- The cost of shipping
- The cost of utilities
Mixed costs can be difficult to manage because they are not always easy to predict. However, there are a number of techniques that can be used to manage mixed costs, such as activity-based costing and budgeting.