How to segregate semi-variable cost.

Semi-variable costs:- Semi-variable costs are mixed costs, a portion is fixed and another portion is variable. For example Telephone Expenses, Electricity bill, Service department wages e.t.c

We can segregate semi-variable costs in the following way.

Per unit variable cost = Difference in total costs / Difference in total units

Amount of variable costs = Per unit variable cost * No.of units

Amount of Fixed Costs = Total Costs - Amount of variable costs

Let us consider the following example, it costs tk.84,000 to produce 14,000 units of product X and tk.96,000 to produce 20,000 units. Now we can segregate the cost by applying the above formulas.

Per unit variable cost = (96,000 - 84,000) / (20,000 - 14,000)
                               = 12,000 / 6,000
                               = 2

Amount of variable costs = 2 * 14,000
                                      = 28,000

Amount of Fixed Costs = Total Costs - Amount of variable costs
                                    = 84,000 - 28,000
                                    = 56,000