ECONOMICS

Detailed explanation-1: -A semi-variable cost, also known as a semi-fixed cost or a mixed cost, is a cost composed of a mixture of both fixed and variable components. Costs are fixed for a set level of production or consumption, and they become variable after this production level is exceeded.

Detailed explanation-2: -What is a Mixed Cost? A mixed cost is a cost that contains both a fixed cost component and a variable cost component. It is important to understand the mix of these elements of a cost, so that one can predict how costs will change with different levels of activity.

Detailed explanation-3: -Electricity is a good example of a semi-variable cost. The base rate for service may be constant, but as production grows, power consumption and the company’s electricity bills go up. In other words, there is both a fixed and variable aspect to semi-variable costs.

Detailed explanation-4: -Mixed cost is the total cost that combines two types of costs, i.e., fixed costs and variable costs, and therefore implies that a part of this cost doesn’t change (fixed cost) with changes in production volume. However, the other part (variable cost) changes with the volume or quantity produced.

Detailed explanation-5: -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.