In CVP analysis, managers usually assume that the cost function is linear. Which of the following equations best represents a linear function for total cost if the cost is a mixed cost? A) y = $500 + $80x B) y = $80x² C) y = $80x D) y = $500x + $80x

Question

Quizplus · Accepted Answer

A linear function for total cost in the context of mixed costs is represented by y = mx + b, where 'm' is the variable cost per unit, 'x' is the number of units, and 'b' is the fixed cost. Choice A, y = $500 + $80x, correctly represents a mixed cost with $500 as the fixed cost and $80 as the variable cost per unit.

In CVP Analysis, Managers Usually Assume That the Cost Function