ECONOMICS

Detailed explanation-1: -Semi-variable costs have both a fixed component and a variable component. The fixed portion of a semi-variable cost remains constant despite changes in activity volume. The variable portion of a semi-variable cost changes with increases and decreases in activity volume.

Detailed explanation-2: -The fixed cost refers to a cost that doesn’t change regardless of the production output. In contrast, a variable cost is one that depends solely on the level of output. A semi-variable cost therefore combines the features of a fixed cost and a variable cost.

Detailed explanation-3: -So a cost that contains the components of both the fixed as well as the variable cost is said to be a semi-variable cost. In other words, we say that a cost that remains fixed up to a certain level of production and changes with the change in the volume of production beyond this level is a semi-variable cost.