Consider a Diagram in Which the Variable Measured on the Y-Axis

question 190

Multiple Choice

Consider a diagram in which the variable measured on the y-axis remains constant while the variable measured on the x-axis increases.The graph of these two variables is

• A)a vertical line.
• B)a horizontal line.
• C)a line that has positive slope.
• D)a line that has a negative slope.
• E)non-existent because the two variables are not related.

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to fixed costs and profits.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Incremental Basis

A method of calculating changes in costs or benefits that result from small variations in the quantity of output or input.

Differential Basis

A method of calculating or analyzing the difference in costs or revenues between two alternative actions.