Salaries paid to shift supervisors are an example of a a. step-variable cost. b. step-fixed cost. c. mixed cost. d. variable cost.
The answer is Option b. | |||||||||
Salaries paid to shift supervisors are an example of a step-fixed cost. | |||||||||
A step fixed cost is a cost that does not change within certain high and low thresholds of activity, | |||||||||
but which will change when these thresholds are breached. | |||||||||
A threshold breach can result in one of two conditions in regard to a step fixed cost:1) Activity declines 2) Activity Increases | |||||||||
Example of Step fixed costs include : The cost of starting up a new production shift, which includes the salaries of shift supervisors. | |||||||||
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