Why is it important to separate mixed costs into fixed and variable portions?
A) Mixed costs perform like variable costs.
B) The accuracy of budgets may be reduced if mixed costs are fully allocated to either the fixed or variable cost pools.
C) Mixed costs perform like fixed costs.
D) Mixed costs need to be removed from consideration in budgeting.

Question

Quizplus · Accepted Answer

Separating mixed costs into fixed and variable portions is important for accurate budgeting. If mixed costs are fully allocated to either the fixed or variable cost pools, the accuracy of budgets may be reduced. It is important to identify the fixed and variable portions of mixed costs to better understand their behavior and to allocate them correctly in budgets and analyses.

Why Is It Important to Separate Mixed Costs into Fixed