ACCA Applied Knowledge · Management Accounting · Cost classification
A company pays a salesperson a basic salary of $1,000 per month plus a commission of 2% of sales. Which cost behaviour does the salesperson's total pay show?
The pay is semi-variable, also called a mixed cost. The basic salary of $1,000 is fixed, while the 2% commission varies with sales. Because it contains both elements, it is neither purely fixed nor purely variable.
- ASemi-variableCorrect
- BFixed
- CStep fixed
- DPurely variable
Explanation
The pay has a fixed element, the $1,000 salary, and a variable element, the commission linked to sales. A cost with both elements is semi-variable (mixed). It is not purely variable, because pay remains at $1,000 even with zero sales.
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