Concept explainers
Videos
(Learning Objective 1) A graph of a variable cost starts at
- a. any point on the y-axis and is horizontal.
- b. any point on the y-axis and slopes upward.
- c. the origin and slopes upward.
- d. the origin and is horizontal.
To identify: The appropriate answer to the given statement.
Answer to Problem 1QC
The graph of a variable cost starts at the origin and slopes upward.
Explanation of Solution
Variable cost is the cost which incurs for every unit of volume produced. Total variable cost change according to the change in volume. Total variable cost is directly proportioned to the changes in volume.
a.
Any point on the y-axis and is horizontal: This option is incorrect because the Fixed cost is the cost that does not change with the change in output level. The graph which starts with any point on the y-axis and is flat or horizontal is the graph which represents the fixed cost.
b.
Any point on the y-axis and slopes upward: This is not the correct option total cost is the cost which comprises of the sum of fixed cost and variable cost. The graph of fixed cost starts with the y-axis and is constant and the graph of variable cost starts with the origin and slopes upward. So, the graph of the total cost starts with any point on the y-axis and the slope of the total cost is downward sloping.
c.
The origin and slopes upward: The option is incorrect as the graph that starts with the origin and slopes upward is the graph of variable cost. Variable cost is the cost that changes with the change in the level of output.
d.
The origin and is horizontal: This is not the correct option because the graph that starts with the origin and is horizontal shows zero value and lie on the x-axis and it shows the production level or the production line on the graph.
Want to see more full solutions like this?
Chapter 6 Solutions
Managerial Accounting, Student Value Edition (5th Edition)
- ABC Company sold a machine for $56,000 that originally cost $306,000. The balance of the Accumulated Depreciation account related to this equipment was $240,000. The entry to record the gain or loss on the disposal of this machine would include: a. A debit to gain in the amount of $10,000 b. A debit to loss in the amount of 10,000 c. A credit to loss in the amount of $10,000 d. A credit to gain in the amount of $10,000arrow_forwardProvide answer general accountingarrow_forwardGeneral accountingarrow_forward
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College