Semi-Variable Cost

What is a 'Semi-Variable Cost'

A semi-variable cost is 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?

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  3. Is it better for a company to have fixed or variable costs?

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  5. Do production costs include all fixed and variable costs?

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  6. Do minimum wage laws make labor a fixed or variable cost?

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