Question

Using account analysis, what type of cost is the fee the airline company charges for your bags assuming a typical policy is $25 if the bag weighs between 0 and 50 lbs.; $75 if the bag weighs between 50 and 75 lbs. and $125 if the bag weighs between 75 and 100 lbs

Answer 1

Step cost

Step-by-step explanation:

Airline company charging for bags is a type of step cost. Step costs are costs that remain fixed within a stipulated range, thereafter which it changes.

For a particular level of activity, cost remains the same. After this level is crossed, cost is increased to accommodate additional charges that the company has to bear.

In this case, cost remains same between 0 and 50 lbs weight of bag that is $25. If the weight of bag is beyond 50 lbs, then charges increase to $75. This is an example of step cost.