When using the visual-fit method to estimate a cost function,the variable cost per unit of the cost driver is equal to the ________.
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) slope of the sketched line (through all or most of the data points)
D) any point on the sketched line divided by the fixed cost

Question

Quizplus · Accepted Answer

The variable cost per unit of the cost driver is equal to the slope of the sketched line (through all or most of the data points). The slope represents the change in cost per unit change in the quantity of the cost driver. The point where the line intersects the x-axis represents the fixed cost. The point where the line intersects the y-axis is not relevant in determining the variable cost per unit. Dividing any point on the sketched line by the fixed cost would not give the variable cost per unit.

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