Fill in the Blank QuestionFill in the blank question.A cost which reflects a stair-step pattern in costs is called a cost

A cost which reflects a stair-step pattern in costs is called a step cost.

Explanation

Step costs are fixed over a certain range of production or activity but increase in a stair-step manner when production exceeds certain thresholds. For example, a business might have fixed costs for an operation with a certain production capacity, but once production exceeds that capacity, additional costs arise, such as the need to hire more staff, rent additional space, or purchase more equipment. This kind of cost behavior contrasts with linear fixed costs that remain constant regardless of the level of activity and variable costs that change proportionately with production levels. Understanding step costs is crucial for budgeting and forecasting in business, as it allows for better planning of expenses associated with various levels of production.