Question

A company has 200 machines. The company needs one maintenance worker for every 10 machines. Each maintenance worker is paid a flat salary of $3,000. With respect to the number of machines, the maintenance cost is a: A. Mixed cost B. Fixed cost C. Step cost D. True variable cost

Answer 1

Answer:

C. Step cost

Explanation:

A step cost is the cost that do not varies with the change in the volume of an activity. It is to be considered as a fixed cost having some kind of specific boundaries. If it is beyond that it would be changed

Therefore in the given situation, for the number of machines, the maintenance cost should be term as a step cost and the same is to be considered