A part of monthly telephone bill is fixed as telephone rent and service charge, and the remaining part depends on number of calls made by the consumer. If a person makes 100 calls then the bill amounts to Rs. 500 and if he make 80 calls then the bill amounts to Rs. 480. Find the amount of bill if he makes 200 calls.
Answer:
Expense can be classified as:
Variable Expense- Which increases or decreases with the volume of activity.
Fixed Expenses- Fixed in term of value and does not change with the volume of activity.
Semi- Variable Expenses- These expenses are fixed till a particular level thereafter changes with the volume. Telephone expenses to the extent of Rs.200 is fixed and thereafter variable, hence its a semi- variable cost.
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