Why Is It Necessary to Separate a Mixed Cost into Its

question 159

Essay

Why is it necessary to separate a mixed cost into its variable and fixed components?

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Definitions:

Speculative Instruments

Financial instruments that carry a high degree of risk, as they are based on the speculation of future prices rather than fundamental or intrinsic values.

Hedge Risks

Strategies or financial instruments used to offset potential losses or gains that may be incurred by a companion investment.

Significant Liability(ies)

Refers to considerable financial obligations or debts that a company or individual has, which may impact their financial stability or creditworthiness.

Loans And Leases

Financial arrangements where loans involve borrowing money that must be repaid with interest, while leases involve paying for the use of an asset for a specified period.