In the cost equation, y = $500 + $5.40x, $5.40 represents:

Name: In the cost equation, y = $500 + $5.40x, $5.40 represents:
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Quizplus · Accepted Answer

$5.40 represents the variable cost per unit. This is because as the value of x (the level of activity) increases, the cost also increases by $5.40 per unit. The $500 represents the fixed cost component. Therefore, this cost equation is an example of a mixed cost, which includes both a fixed and a variable component.

In the Cost Equation, Y = $500 + $5