Finance and accounting
Step cost
A cost that is flat over a range, then jumps.
Last reviewedWhat does Step cost mean?
A step cost stays flat until volume passes a limit, then jumps to a new level. One supervisor can manage up to 20 workers; the 21st worker means hiring a second supervisor. Step costs matter in capacity and expansion cases.
Related terms
- Fixed costA cost that stays the same when volume changes, within a normal range.
- Semi-variable costA cost with a fixed part and a part that moves with volume.
- Capacity utilizationActual output as a share of the most that could be produced.
- ProfitThe money left over after costs. Revenue minus cost.
- RevenueMoney earned from sales, before costs.
- CostWhat it takes to make and sell the product in a period.
- Variable costA cost that rises and falls with how much you make.
- Marginal costThe extra cost of making one more unit.