What are Mixed Expenses?

Mixed expenses contain both fixed and variable components. There is a baseline fixed cost that does not vary, irrespective of changes in activity levels, as well as a variable cost component that will change in conjunction with activity. This means that a mixed expense will not be entirely eliminated, even when the activity level drops to zero.

Examples of Mixed Costs

An example of a mixed expense is a vehicle, which incurs a licensing cost even if it is never driven, as well as a fuel cost that changes in conjunction with the miles traveled. Another example is production equipment, which incurs a depreciation expense even when it is not being used.