When using the visual-fit method to estimate a cost function,we can estimate the fixed cost by ________.
A) the point where the sketched line (through all or most of the data points) intersects the x-axis
B) the point where the sketched line (through all or most of the data points) intersects the y-axis
C) calculating the variable cost per unit of the cost driver
D) subtracting the variable cost at any cost driver level from the total cost

Question

Quizplus · Accepted Answer

The fixed cost in the visual-fit method is estimated by the point where the sketched line intersects the y-axis, as this represents the total cost when the level of activity (cost driver) is zero.

When Using the Visual-Fit Method to Estimate a Cost Function,we