Fixed costs are costs which do ·not vary with any change in the level of activity or output. Variable costs do change. These costs can be plotted on a graph, as seen in Figures 4.1 (fixed costs) and 4.2 (variable costs). Some costs remain stable for a range in the volume of activities only but once the level of activity exceeds a threshold, they go up in steps. Such costs are semi-variable. Example 5.1 brings out the fixed, variable and semi-variable costs of the operation.