A hospital requires one nurse for each eight patients. This is an example of a
A) fixed cost.
B) variable cost.
C) step cost.
D) mixed cost.

Question

Quizplus · Accepted Answer

A step cost is a cost that remains fixed over a certain activity range but increases or decreases in a step-like manner once that range is exceeded. In this case, the cost of hiring nurses is fixed for every eight patients. Once the number of patients exceeds eight, the cost of hiring another nurse would increase, making it a step cost. Therefore, the given scenario is an example of a step cost.

A Hospital Requires One Nurse for Each Eight Patients