Semi-Variable Cost

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Semi-Variable Cost

A cost for an individual or company that consists of a fixed base cost and another cost that changes from time period to time period. For example, suppose one's landlord rolls utility costs together with the rent. One's rent thus becomes a semi-variable cost because one pays the rent (a fixed cost) and the electric, gas, and water bills (variable costs) together with the same check.
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However, there could be a breaking point where the test volume increase (to say 40%) would necessitate another supervisory position, which forces an increase in the semivariable cost.
Fixed and semivariable cost structures normally are less than optimal areas to begin with, since they often take longer to affect.
In our opinion, Forward Air's many strengths include the following: a leading position in a large, fragmented, and growing industry; a well-recognized brand; a strong value proposition; leading technology; a seasoned leadership team (averages 20 years); a proven growth formula; no vendor or customer concentration; a semivariable cost structure; consistent operating margin; strong ROE (27% in 2006) and ROIC (22%); and a solid balance sheet with essentially zero debt and $42.
If trade takes place, shipping any of the commodities to another agent incurs semivariable costs of transportation.
This improvement was offset by lower average unit volumes, which decreased leverage of fixed and semivariable costs.
Due to the existence of fixed and semivariable costs, actual costs do not change in direct proportion to a single cost "driver.