Assume a scattergraph shows $100 at no activity and $1,500 at an activity level of 1,000 units.The variable cost per unit is
A)$2.00.
B)$1.40.
C)$2.50.
D)$5.00.

Question

Quizplus · Accepted Answer

To calculate the variable cost per unit, we need to determine the slope of the scattergraph. Using the two data points given, we can calculate the slope as follows:

Slope = (Change in cost) / (Change in activity level)
Slope = ($1,500 - $100) / (1,000 units - 0 units)
Slope = $1,400 / 1,000 units
Slope = $1.40 per unit

Therefore, the variable cost per unit is $1.40. The correct answer is B.

Assume a Scattergraph Shows $100 at No Activity and $1,500