Salesman's earnings combine fixed and variable elements

Steps:

• Break down earnings: basic salary (unchanging) plus commission (tied to sales volume).
• Classify salary as fixed cost: remains constant regardless of sales.
• Classify commission as variable cost: increases directly with sales output.
• Combine components: total earnings show both fixed and variable behavior, making it semi-variable.

Why B is correct:

• Semi-variable costs include a fixed base plus a variable portion that fluctuates with activity level, as defined in cost accounting.

Why the others are wrong:

• A: Fixed costs stay constant and do not vary with sales activity.
• C: Stepped costs remain fixed over ranges of activity then jump abruptly, not continuously like commission.
• D: Variable costs change proportionally with output and lack a fixed component like salary.

Final answer: B