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Question
Distinguish between variable cost and semi-variable cost.
Solution
| Variable Cost | Semi-Variable Cost | ||
| 1. | Variable costs are the costs that vary directly in proportion to changes in the volume of output. | 1. | Semi-Variable Costs which do not vary proportionately but do not remain constant with changes in the volume of output. |
| 2. | E.g., Direct material cost, Direct labour cost. | 2. | E.g., in telephone costs, basic rental charge is fixed but call charges are variable. |
RELATED QUESTIONS
Give one example of Variable cost.
"A fixed cost is a cost that a business must pay whether it produces one product or a million. Regardless of output, the business must pay the same," amount spent to purchase a machinery is the example of ______ cost.
The cost which changes as per the levels of production is ______.
The cost which does not vary proportionately but do not remain constant with changes in the volume of output are known as ______ cost.
Telephone cost is an example of ______ cost.
______ cost is activity based. It increases with increase in output.
Costs like rent, insurance etc. which do not change inspite of changes in the volume of output are ______ costs.
What is semi-variable cost?
What are fixed costs?
What is Variable cost?
