Financial management...... Types of cost include costs can be classified as being fixed, variable, semi-fixed and semi-variable. A fixed cost is the cost where expenditure does not increase or decrease with changes in the level of productive activity. A variable cost is any expenditure that varies in direct proportion to a change in the level of productive activity. Semi-fixed cost is one that varies with changes in volume but, unlike a variable cost, does not vary in direct proportion; also called mixed cost. In other words, this cost contains both a variable and fixed component. Examples are the rental of an ambulance, where a fixed rental fee plus a variable charge based on mileage is made; and power costs, where the expense consists of a fixed amount plus a variable charge based on consumption. The term semi-variable cost refers to expenditure which remains fixed within a particular level of productive activity, which is referred to as the range. If the level exceeds this range, then additional costs will be incurred.
Posted on: Tue, 19 Nov 2013 05:16:54 +0000
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