Which of the following describes the intercept in a linear cost function?
A)the component of fixed costs that, within the relevant range, does not vary with changes in the level of the cost driver
B)the component of fixed costs that, within the relevant range, does vary with changes in the level of the cost driver
C)the component of variable costs that, within the relevant range, does not vary with changes in the level of the cost driver
D)the component of variable costs that, within the relevant range, does vary with changes in the level of the cost driver
E)the sum of the components of both fixed and variable costs that, within the relevant range, do not vary with changes in the level of the cost driver

Question

Quizplus · Accepted Answer

The intercept in a linear cost function represents the fixed costs, which do not vary with changes in the level of the cost driver. It is the cost incurred even at zero level of activity or production. Therefore, the correct choice is A.

Which of the Following Describes the Intercept in a Linear