2026 Accounting for Planning and Control Practice Test 1 – Complete All-in-One Study Guide for Success

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A company is charged $50 per month plus $2.10 per kilowatt hour for electricity. In this case, electricity is a(n)

Fixed cost

Variable cost

Mixed; Semivariable

The concept being tested is how to classify a cost that has both a fixed portion and a variable portion. Here, electricity has a fixed monthly charge of 50, paid regardless of usage, plus a variable charge of 2.10 for each kilowatt hour consumed. This means total electricity cost changes with usage, but includes a constant baseline each month. That combination is a mixed (semi-variable) cost. It’s not purely fixed because it rises with more kilowatt hours, and it’s not purely variable because you still pay the fixed monthly amount even if you use nothing. For example, at zero usage the bill is 50, and at 100 kWh the bill would be 50 + (2.10 × 100) = 260.

Step cost