ExpertMedium2 marksMultiple Choice
ACCA · Question 02 · Cost Behavior and Classification
Section A
Quantum AI, a tech startup, classifies its costs to better understand cost behavior. Server hosting costs are charged at a flat rate of $5,000 per month for up to 10 terabytes of data processed. For every additional terabyte processed, an extra $400 is charged. How should this cost be classified?
Section A
Quantum AI, a tech startup, classifies its costs to better understand cost behavior. Server hosting costs are charged at a flat rate of $5,000 per month for up to 10 terabytes of data processed. For every additional terabyte processed, an extra $400 is charged. How should this cost be classified?
Answer options:
A.
Stepped fixed cost
B.
Semi-variable cost
C.
Variable cost
D.
Fixed cost
How to approach this question
Analyze the cost structure: it has a base flat fee (fixed) and an additional per-unit charge (variable). This combination defines a semi-variable cost.
Full Answer
B.Semi-variable cost✓ Correct
Semi-variable costs (or mixed costs) contain both a fixed element (the $5,000 flat rate) and a variable element (the $400 per additional terabyte).
Common mistakes
Confusing semi-variable with stepped fixed costs. Stepped fixed costs jump in blocks, whereas semi-variable increases continuously after the fixed threshold.
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