agree or disagree with post? why? 300 words or more

After reviewing the short video on fixed and variable (Semi-variable or mixed costs), I have a better understanding of the accounting terms mentioned. The difference between fixed costs and variable costs is that fixed costs do not adjust with activity volume, while variable costs are related to activity volumes. A fixed cost does not change over the short-term and variable cost varies in relation to changes (Brigham & Ehrhardt, 2016). Furthermore, a fixed cost does not change with an increase or decrease, and it is stable or balanced. For example, a tenant pays $2,000 per month for rent of a 3-bedroom, 2-bathrooms single family residence. In this example, the tenant is obligated to pay a fixed monthly rent amount of $2,000 throughout the term of the lease agreement with the landlord. On the other hand, variable costs go up or down with the amount produced or based on the market.

Moreover, a mixed cost is a cost that includes both a fixed cost component and a variable cost component (Noreen, Brewer & Garrison, 2020). It is important to understand the mix of these elements of a cost, so that one can analyze or interpret how costs will change with various levels of activity. For example, cell phone usage is are considered to be a mixed cost. A customer can be charged a fixed amount on a monthly basis for certain services however, when a customer exceeds their limit for data, storage or text messages they can be charge based on their usage. With being said, the term mixed costs are referred to costs and expenses that consist of both fixed and variable components.

In addition, management is the administration of business practices to establish the most effective methods, procedures and systems within an organization (Kleindorfer, 2009). Nevertheless, managers ensure their organization is running efficiently by planning, organizing and maintaining important functions and day-to-day operations within an organization. With this in mind, it is imperative for managers to understand the difference between fixed, mixed and variable costs. Additionally, managers should be able to determine whether or not income or expenses are fixed, variable or mixed. Thus, by understanding the differences in these costs managers will ensure the profitability and stability of the organization.