Join thousands of students who trust us to help them ace their exams!Watch the first video
Multiple Choice
Which of the following best describes a mixed cost in the context of inventory accounting systems?
A
A cost that includes both fixed and variable components.
B
A cost that remains constant regardless of production volume.
C
A cost that is only incurred when inventory is purchased.
D
A cost that is recognized only under the periodic inventory system.
Verified step by step guidance
1
Understand the concept of mixed costs: Mixed costs are expenses that have both fixed and variable components. Fixed costs remain constant regardless of production volume, while variable costs change with production activity.
Analyze the options provided: The first option mentions a cost that includes both fixed and variable components, which aligns with the definition of mixed costs.
Evaluate the second option: A cost that remains constant regardless of production volume describes a fixed cost, not a mixed cost.
Evaluate the third option: A cost incurred only when inventory is purchased refers to a direct cost related to inventory acquisition, not a mixed cost.
Evaluate the fourth option: A cost recognized only under the periodic inventory system is specific to accounting methods, not the nature of mixed costs. Therefore, the first option best describes a mixed cost.