Question:A production worker is paid a salary of $650 per month, plus an extra 5 cents for each unit produced during the month.
How is this type of labour cost best described?
A. A variable cost
B. A step cost
C. A semi-variable cost
D. A fixed cost
The correct answer is: A semi-variable cost
The salary is part fixed ($650 per month) and part variable (5 cents per unit). Therefore it is a semi-variable cost.
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