We discussed cost behavior and cost structure. Costs are often categorized as variable, fixed, or mixed. A variable cost varies, in total, in direct proportion to changes in the level of activity. A fixed cost is a cost that remains constant, in total, regardless of changes in the level of activity. A mixed cost contains both variable and fixed cost elements. We also discuss the significance of relevant range that affects cost behavior. Knowledge Check 01 In the equation, Y = a + bX, X represents _________blank. multiple choice the total mixed cost the level of activity the total fixed cost the variable cost per unit of activity