Semi-Fixed or Semi-Variable Costs
Situations will also arise where the costs are neither totally fixed nor totally variable, but are a combination of each and therefore are called semi-fixed or semi-variable. For example, in the case of a motor vehicle, some elements of maintenance such as tune-ups, etc, would remain fixed whether you drove 10,000 km or 20,000 km.
However, oil and tyre replacements would be more frequent, because of driving the longer distances, so these costs include both fixed and variable elements and are often called semi-fixed and semi-variable. In addition, other costs can be fixed over a wide, but specific range of activity. For example, depreciation on a car driven for 10,000 km in a year may be $500 and it would still be $500 if the car is driven 2,000 km more.
However, if that same car was driven twice the distance, then the depreciation would increase because of the increase wear and tear, even though it is not necessarily in direct proportion to the actual kilometres driven in the vehicle.
Profit and Loss Account Example
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