Some costs are semi-variable in nature. Justify either for or against and give a reason.

FOR — The statement is correct. Some costs are indeed semi-variable in nature.

Reason:

Semi-variable (semi-fixed) costs are those costs which vary but not in direct proportion to the changes in the volume of production. They are a combination of fixed and variable components — partly fixed and partly variable. The fixed component represents the cost of providing the capacity, while the variable component is caused by using that capacity.

A common example is the telephone bill:

• A fixed monthly rental of, say, ₹500 must be paid regardless of usage (the fixed component).
• Additional charges are paid based on the number of calls made (the variable component).

Hence the classification of semi-variable cost is justified.