Step costs are fixed over small range of activity and then jump up to a new fixed level with moderate changes in volume.

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Step costs are characterized by fixed costs over a small range of activity, followed by a sudden jump to a new fixed level with moderate changes in volume. This pattern of cost behavior can occur when a company reaches the limit of its current production capacity, and must incur significant additional costs to expand its capabilities.

Step Costs Are Fixed Over Small Range of Activity and Then