1-6. Fixed, variable and mixed costs. Starlite Hotel, Inc. collected the following data regarding four categories of operating costs at two different activity levels: Examples of hotel operating costs include labor, utilities, supplies, insurance, depreciation on PP\&E, etc. Classify the cost behavior (fixed, variable or mixed) of each cost item with respect to the number of guests served. - Variable costs change in direct proportion to changes in activity. For example, if activity increases 50%, total variable costs increase 50%. Fixed costs remain constant at every activity level. Mixed costs are a hybrid and contain both a fixed cost component and a variable cost component. Total mixed costs increase as activity increases, but not in direct proportion to the change in activity