Final answer:
The correct formula to calculate the total cost at any level of activity is Total cost = fixed cost + (variable rate * volume of activity). This equation reflects the addition of fixed costs to variable costs, where fixed costs remain constant and variable costs depend on the level of activity or production.
Step-by-step explanation:
The formula for expressing the total of a fixed, variable, or mixed cost at any level of activity is: Total cost = fixed cost + (variable rate * volume of activity). Using the example of 'The Clip Joint' barber shop, we observe that the fixed costs of operating the shop, such as rent and equipment, amount to $160 per day and do not change regardless of the amount of haircuts produced. The variable costs, like wages for the barbers, are $80 per barber each day. The total cost at each level of output is calculated by adding the fixed cost to the total variable costs, which are determined by multiplying the number of barbers hired by their daily wage.
For instance, if 'The Clip Joint' employs two barbers for the day, the total variable cost would be 2 × $80 = $160. To find the total cost, we combine the fixed cost with the variable cost: $160 (fixed cost) + $160 (variable cost) = $320 (total cost).