Semi-Variable Cost

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."

BREAKING DOWN '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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RELATED FAQS
  1. How are semi-variable costs similar to fixed costs?

    Semi-variable costs and fixed costs are similar. Semi-variable costs consist of fixed costs and variable costs. A fixed cost ... Read Full Answer >>
  2. What are the variables in variable costs?

    Variable cost is an economic term that refers to an expense a company is facing that varies based on factors that are inconsistent ... Read Full Answer >>
  3. Do minimum wage laws make labor a fixed or variable cost?

    Labor is a semi-variable cost. Semi-variable costs have elements of variable costs and fixed costs. Variable costs vary with ... Read Full Answer >>
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