Part $1$: Fixed, Mixed, or Variable Cost Classifications

Mr$.$ Suncat recently read an article about how important it is to know if your costs are variable, fixed, or mixed costs. He has asked you to use the costs that he provided to you earlier $($from Case Study $1),$ to complete the chart by placing an $"x"$ under the appropriate heading$($s$).$

Step $1$: For each cost, mark the cost as a product cost or a period cost.

Step $2$: If the cost is a product cost, then mark the cost as a variable cost, a fixed cost, or a mixed cost.

$\backslash$table$[[,\backslash$table$[[$Variable$],[$Costs$]],\backslash$table$[[$Fixed$],[$Costs$]],\backslash$table$[[$Mixed$],[$Costs$]],\backslash$table$[[$Product$],[$Costs$]],\backslash$table$[[$Period$],[$Costs$]]],[$Mortgage on the Cake Shop,,,,,$],[$Insurance on the Cake Shop,,,,,$],[$Baking ingredients $($flour$,$ sugar, etc$),,,,,],[$Utilities for the Cake Shop,,,,,$],[$Office supplies,,,,,$],[$Wages for the bakers,,,,,$],[$Salary for his accountant, Mrs$.$ Suncat,,,,,$],[$Depreciation on office equipment,,,,,$],[$Cooking spray to grease cake pans,,,,,$],[$Bakery supervisor wages,,,,,$],[$Advertising costs,,,,,$],[$Depreciation of the baking equipment,,,,,$],[$Baking equipment repairs,,,,,$]]$

Even after reading the article, Mr$.$ Suncat was still a little unclear on what a mixed cost is and how the high$-$low method calculation works and has asked you to explain these to him. He is really intrigued by the high$-$low method and has specifically asked that you give an example of the high$-$low method calculation.

a$.$ Define a mixed cost and give three examples.

b$.$ Explain the purpose of the high$-$low method.