Which cost is best described as a semi-variable cost?
Correct answer: D. Electricity with a fixed charge and usage charge
- A. Factory rent that never changes
- B. Direct material cost per unit
- C. Annual insurance paid in advance
- D. Electricity with a fixed charge and usage charge
Explanation
A semi-variable cost contains both a fixed component and a variable component. Electricity may include a basic connection charge plus a charge based on consumption.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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