The cost per unit for making 100 units is £5.But for 200 units,the cost per unit is £4.
This is an example of:
A) A fixed cost
B) A variable cost
C) A semi-variable cost
D) A stepped cost

Question

Quizplus · Accepted Answer

Fixed costs remain unchanged regardless of activity.Variable costs vary directly in line with output; cost per unit is unchanged.Semi-Variable costs have a fixed element and a cost per unit - this is what we have here. If you want to work it out, then the total cost for 100 units is £500 and for 200 units £800.The difference of £300 is the direct or variable costs for an additional 100 units = £3 per unit.So there must be a fixed cost of £200 as well.Stepped costs behave like fixed costs up to a certain level, and then jump up.

The Cost Per Unit for Making 100 Units Is £5