Semi-Variable Cost

Semi-Variable Cost

A cost composed of a mixture of fixed and variable components. Costs are fixed for a set level of production or consumption, becoming variable after the level is exceeded. Also known as a "semi-fixed cost."

Notes:

This type of cost is variable in the sense that greater levels of production increase total cost. If no production occurs, then a fixed cost is still incurred.

Labor costs in a factory are semi-variable. The fixed portion is the wage paid to workers for their regular hours. The variable portion is the overtime pay they receive when they exceed their regular hours.

See also: Fixed Cost, Operating Margin, Variable Cost