Step costs
In one sentenceCosts that stay fixed within a certain range of activity and then jump in one go to a higher level when it is exceeded, such as a supervisor's salary for each group of workers.
Simply put
They are neither fully fixed nor variable with each unit; they move in steps: one supervisor is enough for ten workers, and the eleventh worker needs a second supervisor.
Watch for them when expanding: a small increase in activity may cost you a big jump.
Worked example
A factory needs one supervisor for every 10 workers, a supervisor's salary is 9,000 SAR per month, and it has 14 workers.
From 1 to 10 workersOne supervisor = 9,000 SAR
From 11 to 20 workersTwo supervisors = 18,000 SAR
Supervision cost at 14 workers2 × 9,000 = 18,000 SAR
Don't confuse it with
Semi-variable costsSemi-variable costs have a fixed part and a part that rises gradually with each unit, while step costs jump in stages.