Because it intersects the __________, the slope coefficient of the cost function is zero?
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Answer: B. y-axis at constant
Explanation
In a cost function, the intercept on the y-axis represents the fixed cost constant, meaning the slope coefficient measures variable costs per unit instead. The y-intercept defines total fixed costs incurred even when the activity level is zero. Because fixed costs do not change with activity, their graphical representation intersects the y-axis at the constant value. Cost functions are mathematically expressed as total cost equals fixed cost plus variable cost multiplied by activity. The fixed cost is a constant value represented by the y-intercept on a cost graph. The slope of the line reflects the variable rate per unit of activity.
Cost accountants graph historical cost data using scatterplots or regression lines to visualize fixed and variable cost components. Understanding the y-intercept helps managers estimate baseline operating expenses quickly. Options A and C incorrectly reference the x-axis for cost function intercepts. Option D introduces a number one factor that does not align with standard mathematical cost function geometry.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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