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semi-variable cost

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One more limitation of cost-volume-profit analysis is that it assumes that fixed costs are unlikely to stay constant as output increases beyond a certain range of activity. Security and lighting for instance may be regarded as fixed costs at some point but as production increases there may be need to light up and guard additional storage.

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Do we ever need to change what may be considered a fixed cost to a semi-variable cost?

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Solution Summary

This solution discusses whether we need to change what might be considered a fixed cost and semi-variable cost.

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Yes, we may have to make adjustments to fixed costs and translate to a semi-variable cost after a certain level. This ...

Solution provided by:
Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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