Question

A businesss telephone bill should normally be classified into which one of the following categories?

• A. Fixed cost
• B. Stepped fixed cost
• C. Semi-variable cost
• D. Variable cost

Answer 1

Answer: (C)

Semi-variable cost

Semi -variable cost is a combination of fixed cost and variable cost. Up to a certain level the cost is fixed and thereafter it increases with the volume.

Telephone bills typically having a fixed rental and certain free calls, thereafter every call is chargeable. Hence this is an example of semi-variable cost.