Consider the following costs: I.The cost of electricity which is used to power machinery and light the plant.
II)Depreciation on the building which houses both the factory and the sales office.
Which of the following statements is true?
A)Only statement I is an example of a semivariable cost.
B)Only statement II is an example of a semivariable cost.
C)Both statements I and I are examples of semivariable costs.
D)Neither statement I nor II is an example of a semivariable cost.

Question

Quizplus · Accepted Answer

Statement I is an example of a semi-variable cost as it has both a fixed component (the base cost of electricity supply) and a variable component (the cost of electricity used by the machinery and lights). Statement II is not an example of a semi-variable cost as it is solely a fixed cost (depreciation).

Consider the Following Costs: I