Semi-Fixed Expenses are those expenses that are not directly linked to the number of vehicles that you sell. They represent those expenses that you have to pay to keep the department running whether you sell anything or not.
A good example here is basic salaries or advertising. If you do not sell any vehicles, you still have to pay for advertising and the basic salary for each Salesperson and the Sales Manager.
Typically, Semi-Fixed expenses are shown as a monetary value per unit sold and also as a percentage of Sales Department Turnover.
Example:
A) Semi-Fixed Expenses = R280,326 B) Department Turnover = R7,432,165 C) Vehicles Sold = 784 D) Semi-Fixed Expenses p/unit = R358 (A ÷ C) E) Semi-Fixed Expense % = 3.7% (A ÷ B X 100)
Discussion:
The reason that they are called Semi-Fixed is that they are fixed each month irrespective of sales volume, but the Directors of the business decide at what value those expenses are fixed.
The important thing to note here is that these expenses are not linked to sales volume.