Semi-Variable Cost

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DEFINITION of 'Semi-Variable Cost'

A cost composed of a mixture of fixed and variable components. Costs are fixed for a set level of production or consumption, becoming variable after the level is exceeded.

Also known as a "semi-fixed cost."

INVESTOPEDIA EXPLAINS 'Semi-Variable Cost'

This type of cost is variable in the sense that greater levels of production increase total cost. If no production occurs, then a fixed cost is still incurred.

Labor costs in a factory are semi-variable. The fixed portion is the wage paid to workers for their regular hours. The variable portion is the overtime pay they receive when they exceed their regular hours.

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