Step-fixed cost
A step-fixed cost remains constant within a range of activity but jumps to a higher fixed level once a capacity threshold is crossed, such as hiring an additional supervisor when a second production shift is added.
FrameworkCost behaviour
See it move
One floor manager, at €40,000 a year, covers up to 15,000 orders. Crossing that threshold requires a second manager, taking total supervisory cost to €80,000 for the 15,001-to-30,000 range. A third manager is needed beyond 30,000, bringing the cost to €120,000 for the 30,001-to-45,000 range — flat within each band, then a step at each boundary.
Check yourself
A bakery employs one production supervisor, costing €35,000 per year, who can oversee up to 20,000 loaves. If output exceeds 20,000 loaves, a second supervisor must be hired at the same cost. How is the supervisory cost best classified?