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Explain step costs and mixed costs. Is it possible to classify these as variable or fixed?...

Explain step costs and mixed costs. Is it possible to classify these as variable or fixed?

Is it possible for a particular cost to be classified as variable in one decision making situation and fixed in another situation? Explain.

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Step cost - These are expenses which remain constant upto a particular level of activity but increases or decreases when the given activity level is crossed . So this cost changes disproportionately with change in activity levels .

Mixed cost - It is cost thave have elements of both fixed cost and variable cost .So a portion of this cost known as fixed cost will not change with change in production level but other part known as variable cost changes proportionately with change in production .

It is not possible to classify step cost and mixed cost as fixed cost and varible cost because these both contains element of fixed cost and variable cost .

No it is not possible to classify a particular cost as fixed or variable according to situation this is because of inherent nature of both the cost , fixed cost remain constant for any level of production whereas variable cost changes proportionaely with change in level of production .

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ekkarill92 answered 1 year ago
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