In CVP Analysis, Managers Usually Assume That the Cost Function

question 11

Multiple Choice

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 = $200 + $60x
• B) y = $60x2
• C) y = $60x
• D) y = $200

---

Definitions:

Gross Accounts Receivable Approach

A method to estimate the total amount of receivables, including both collected and still outstanding payments.

Unadjusted Year End

The conclusion of a fiscal year before any adjustments are made for accounting purposes, such as accruals or deferrals.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal.

Bad Debt Expense

The cost associated with accounts receivable that a company can no longer collect because they are considered uncollectible.