Question

Brief the difference between Step-fixed cost and Semi-variable cost. (Cost Accounting)

Answer 1

Step - Fixed cost

Step fixed cost is a cost which is constant at certain level of activity but at a new step or range, fixed cost increases or decreases at a new constant level and the process going on.

Example of Step fixed cost : Rent

Rent is a fixed cost at a certain level. If the requirement of the company increases because expansion of business then the company hire one more building. So, the rent also increases at a certain new constant level.

Semi - Variable cost

Semi variable cost is a cost which includes both fixed cost and variable cost. It is fixed at certain level of production but with the rise in the production, it become variable.

Suppose the company hires a salesman for selling the company's products. It fixes the salary of the salesman which is fixed and also paid commission which is variable depends on the quantity that he sells.