Memo: Discussing Fixed, Variable and Mixed Costs
Can you help me with this task? I am not too sure where to begin?
Details: You have been studying ‘fixed’ costs. You learned that a number of ‘fixed’ costs are actually mixed costs (variable and fixed). Write a two paragraph memo to your manager explaining some of the cost estimation techniques that can help determine the fixed and variable portion of each mixed cost (such as utility costs and maintenance costs). Your response should not be limited to just the definitions of fixed, variable, and mixed costs.
Objective: Explain how to arrive at the appropriate derivation of a cost.