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    The document discusses linear cost functions. It provides an example of a company that produces picture frames with fixed costs of $400 for assembly tools and variable costs of $1.80 per frame for materials. The correct linear cost function for this situation is y = 400 + 1.80X, with a fixed cost of $400 and variable cost of $1.80 per frame. A linear cost function can represent fixed, variable, or mixed costs. It must be a straight line and the slope coefficient represents the variable cost per unit.

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    The document discusses linear cost functions. It provides an example of a company that produces picture frames with fixed costs of $400 for assembly tools and variable costs of $1.80 per frame for materials. The correct linear cost function for this situation is y = 400 + 1.80X, with a fixed cost of $400 and variable cost of $1.80 per frame. A linear cost function can represent fixed, variable, or mixed costs. It must be a straight line and the slope coefficient represents the variable cost per unit.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    10 views1 page

    Ab 10

    Uploaded by

    Spade X
    The document discusses linear cost functions. It provides an example of a company that produces picture frames with fixed costs of $400 for assembly tools and variable costs of $1.80 per frame for materials. The correct linear cost function for this situation is y = 400 + 1.80X, with a fixed cost of $400 and variable cost of $1.80 per frame. A linear cost function can represent fixed, variable, or mixed costs. It must be a straight line and the slope coefficient represents the variable cost per unit.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 1

    1. For January, the cost components of a picture frame include $0.

    35 for the glass,


    $.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost
    $400. 1,000 frames are expected to be produced in the coming year. What cost
    function best represents these costs?
    a. y = 1.80 + 400X
    b. y = 400 +1.80X
    c. y = 2.20 + 1,000X
    d. y = 1.00 + 400X
    Answer: b Difficulty: 2 Objective: 2
    Terms to Learn: linear cost function

    2. A linear cost function can represent:


    a. mixed cost behaviors
    b. fixed cost behaviors
    c. variable cost behaviors
    d. All of these answers are correct.

    Answer: d Difficulty: 2 Objective: 2


    Terms to Learn: linear cost function

    3. The cost function y = 1,000 + 5X


    a. has a slope coefficient of 1,000
    b. has an intercept of 5
    c. is a straight line
    d. represents a fixed cost

    Answer: c Difficulty: 2 Objective: 2


    Terms to Learn: linear cost function

    4. The cost function y = 8,000 + 4X


    a. represents a mixed cost
    b. will intersect the y-axis at 4
    c. has a slope coefficient of 8,000
    d. is a curved line

    Answer: a Difficulty: 2 Objective: 2


    Terms to Learn: linear cost function

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