Write the meaning of semi variable overhead. [1]

Semi-variable overhead refers to an indirect cost that exhibits both fixed and variable characteristics. It remains constant within a certain range of production activity but changes when production levels exceed or fall below that range. In other words, it is partially fixed and partially variable.

For example, electricity cost for a factory may be considered a semi-variable overhead. A minimum amount of electricity is required to keep the factory running (fixed cost), but additional electricity is needed as production increases (variable cost). Thus, the total overhead cost increases in steps rather than continuously.

In cost accounting, semi-variable overheads are often separated into their fixed and variable components through techniques such as the high-low method or scattergraph method to facilitate cost control and decision-making.