ECONOMICS

Detailed explanation-1: -Manufacturing overhead is a mixed cost because it includes fixed overhead and variable overhead, which varies on the activity level of the production. Variable overhead increases as units of activity level increases.

Detailed explanation-2: -Overhead Costs – Types Typically, there is no volatility in the overhead with increases or decreases in the production of a given product. Thus, it is considered to be a fixed cost. Common fixed costs include salaries for supervisors, managers, and administrative staff, rent for buildings, and tax liabilities.

Detailed explanation-3: -For example, if a company’s monthly office space rent is $10, 000 and their monthly utilities bill is $500, then their total monthly cost would be $10, 500. In this case, the rent would be the fixed cost and the utilities would be the variable cost. Together they would make up the mixed cost.

Detailed explanation-4: -Variable costs include direct labor, direct materials, and variable overhead.

Detailed explanation-5: -Fixed costs remain the same no matter how many units you produce or sell. Variable costs are directly tied to your sales and production. They fluctuate as your output increases and decreases. Mixed costs are a combination of your fixed and variable costs.