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 and beyond the point that the line becomes 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's fee will increase with the amount of time spent on a project up to a certain point (the maximum fee). The line on a graph representing this cost will start at the origin and increase until it reaches the maximum fee, beyond which the cost will become fixed (represented by a horizontal line).

Assuming Costs Are Represented on the Vertical Axis and Volume