Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value beyond which the line is parallel to the horizontal axis?
A)total direct material costs
B)a consultant paid $100 per hour with a maximum fee of $2,000
C)employees who are paid $15 per hour and guaranteed a minimum weekly wage of $300
D)rent on exhibit space at a convention

Question

Quizplus · Accepted Answer

A consultant paid $100 per hour with a maximum fee of $2,000 would be represented by a line that starts at the origin (indicating no cost when no hours are worked) and reaches a maximum value of $2,000 beyond which the line is parallel to the horizontal axis, indicating that the cost does not increase after the maximum fee is reached.

Assuming Costs Are Represented on the Vertical Axis and Volume