Ch. 18: Cost-Volume-Profit (Adaptive Assignment Practice)

d) Total fixed costs plus target net income divided by contribution margin ratio

Describe how you would calculate the sales dollars required to meet a target net income. a) Total fixed costs plus target net income divided by contribution margin per unit b) Total fixed costs minus target net income divided by contribution margin ratio c) Total fixed costs minus target net income divided by contribution margin per unit d) Total fixed costs plus target net income divided by contribution margin ratio

b) 320,000 The formula for break-even point is: Unit contribution margin divided by Unit selling price. Using this formula, Pecan Industries can determine the break-even point as: $2,304,000 ÷ ($16 x .45) = 320,000 units

Pecan Industries has fixed costs of $2,304,000 and its variable costs are $3,008,000 in total and 55% of the $16 unit selling price. What is Pecan's break-even point in units? a) 417,778 b) 320,000 c) 341,818 d) 261,819

a) They need to sell 1,020 more units. Using the shortcut formula, [Target Fixed Costs ($7,550) + Target Net Income ($25,000)] ÷ Contribution Margin per unit ($2.50) = units required to meet the Target Net Income = 13,020 units. Rainbow already sold 12,000 units, so they need to increase units sold by 1,020 in order meet their Target Net Income.

Rainbow Toys has a target net income of $25,000 and fixed costs of $7,550. If they regularly sell 12,000 units and each unit has a contribution margin of $2.50, how many more units do they need to sell to meet their target net income? a) They need to sell 1,020 more units. b) They need to sell 2,000 more units. c) They need to sell 13,020 more units. d) They need to sell 2,550 more units.

d) contribution margin ratio. The contribution margin ratio is the contribution margin expressed as a percentage of sales. Profit margin ratio is the ratio that is calculated by dividing a company's profit, or sales minus all expenses, by its revenue. There is no revenue margin ratio or sales to contribution margin ratio.

The tool used to measure the relationship of contribution margin to sales revenues is the a) revenue margin ratio. b) profit margin ratio. c) sales to contribution margin ratio. d) contribution margin ratio.

c) Net income = (Contribution margin per unit x number of units sold) - Fixed expenses The contribution margin income statement computes profit as follows: Net income = (Contribution margin per unit x Number of units sold) - Fixed expenses.

Which is a version of the profit equation that includes contribution margin per unit? a) Net income = (Contribution margin per unit + variable cost per unit) - Fixed expenses b) Net income = (Contribution margin per unit x variable cost per unit) - Fixed expenses c) Net income = (Contribution margin per unit x number of units sold) - Fixed expenses d) Net income = (Contribution margin per unit x fixed cost per unit) - Variable expenses

b) Contribution margin Contribution margin is Sales revenue minus Total variable expenses. Variable cost ratio is Variable costs divided by Net sales. Variable costs are costs that vary in total directly and proportionately with changes in the activity level. Contribution margin ratio is unit contribution margin divided by unit selling price.

Which of the following can be calculated using this formula: Sales revenue - Total variable expenses? a) Variable cost b) Contribution margin c) Contribution margin ratio d) Variable cost ratio

c) It is useful in determining the increase in net income from a given increase in sales dollars. The contribution margin ratio is calculated as contribution margin divided by selling price. It is useful in determining the increase in net income from a given increase in sales dollars.

Which statement describes one purpose of the contribution margin ratio? a) It is difficult to calculate. b) It is useful in estimating variable and mixed costs. c) It is useful in determining the increase in net income from a given increase in sales dollars. d) It is useful in calculating monthly fixed expenses.

d) The revenue that remains to cover fixed expenses and provide a profit. Contribution margin is the amount of revenue remaining after deducting variable costs. Contribution margin per unit = Sales price per unit - Variable cost per unit.

Which statement describes the contribution margin? a) The revenue that remains to cover mixed costs and provide a profit. b) The revenue that remains to cover variable costs and mixed costs. c) The revenue that remains to cover variable expenses and provide a profit. d) The revenue that remains to cover fixed expenses and provide a profit.

d) number of guests The laundry costs increase in direct proportion to the number of guests at the hotel.

Which unit of activity makes laundry costs a variable for Marriot Hotels? a) number of hotels b) number of cleaning staff c) number of rooms d) number of guests

c) 75% (Fixed costs + Target net income) ÷ Contribution margin ratio = Required sales in units ($468,000 + $572,000) ÷ $4,160,000 = 25% Since the contribution margin ratio is 25% the variable costs must be 75%. To get the variable cost, subtract 100% from the contribution margin ratio.

A company with a fixed cost of $468,000 and a target net income of $572,000 needs to generate sales of $4,160,000 to meet its target net income. What is this company's variable costs as a percentage of sales? a) 25% b) 86% c) 75% d) 13.8%

a) current sales and break-even sales. Margin of safety is the difference between actual or expected sales and sales at the break-even point.

A company's margin of safety is the difference between a) current sales and break-even sales. b) current sales and variable costs. c) current sales and total costs. d) current sales and fixed costs.

d) contribution margin ratio. The contribution margin ratio is calculated as contribution margin ÷ selling price. It is useful in determining the increase in net income from a given increase in sales dollars.

A tool that is helpful in determining the increase in net income caused by an increase in sales revenue is the a) CVP income statement. b) expense margin ratio. c) variable cost ratio. d) contribution margin ratio.

b) 3,600 Angler's current Contribution margin per unit = Sales price per unit - Variable cost per unit contribution margin is $30 - $12 = $18. Break-even = fixed costs / unit contribution margin = ($54,000 x 120%) ÷ $18 = 3,600.

Angler Manufacturing makes fishing poles and sells them for $30 each. The firm's variable costs are $12 per unit, and its total fixed costs are $54,000. This year, Angler anticipates its fixed costs will increase by 20%. What is the firm's break-even point in units assuming the increase in fixed costs and that all other factors remain constant? a) 2,700 b) 3,600 c) 3,000 d) 2,500

b) total fixed cost plus target net income divided by contribution margin per unit. Target Profit (net income) = Sales - Variable costs- Fixed costs. Another way to write this is (Fixed costs + Target net income) divided by unit contribution margin.

Another way to state the target profit formula is to set the units required to meet target net income equal to a) total variable cost plus total fixed cost divided by contribution margin per unit. b) total fixed cost plus target net income divided by contribution margin per unit. c) total variable cost minus total fixed cost divided by contribution margin per unit. d) total fixed cost minus total variable cost divided by contribution margin per unit.

b) $3,000; $1,000 Contribution margin = Sales revenue - Total variable expenses = $10,000 - $7,000 = $3,000. Net income = Sales revenue - Total expenses = $10,000 - $7,000 - $2,000 = $1,000.

Assume sales of $10,000, variable costs of $7,000, and fixed costs of $2,000. Calculate contribution margin and net income, respectively. a) $6,000; $1,000 b) $3,000; $1,000 c) $5,000; $1,000 d) $8,000; $1,000

d) $45,000; $10,000 Contribution margin = Sales revenue - Total variable expenses = $87,000 - $42,000 = $45,000. Net income = Sales revenue - Total expenses = $87,000 - $42,000 - $35,000 = $10,000.

Assume sales of $87,000, variable costs of $42,000, and fixed costs of $35,000. Calculate contribution margin and net income, respectively. a) $10,000; $45,000 b) $45,000; $45,000 c) $10,000; $10,000 d) $45,000; $10,000

b) 50% First, calculate the contribution margin per unit = Sales price per unit - Variable cost per unit = $250 - $125 = $125.Next, calculate the contribution margin ratio = Contribution margin per unit ÷ Sales price per unit = $125 ÷ $250 = 50%.

Bellmare Bikes sells 110 bikes each month for $250 each. The variable cost per bike is $125, and Bellmare's fixed costs are $3,500 per month. What is the contribution margin ratio? a) 38% b) 50% c) 85% d) 44%

c) $8,580 The company earns $65 profit contribution margin per bat and must cover $3,000 in fixed costs. The fixed costs ($3,000) are divided by the contribution margin ($65) for 46.15; this is rounded to 47 units as the break-even point. Because the company sold 125 units, the margin of safety is 125 minus 47, or 78 units. 78 units multiplied by $110 per unit is $8,580 in sales dollars.

If a product's selling price is $110 per unit, the variable cost is $45 per unit and fixed costs are $3,000 per month, then the margin of safety in sales dollars is ________, when 125 units are sold in one month. (In your calculations, round to the next whole number.) a) $2,775 b) $2,950 c) $8,580 d) $4,025

a) $44,200 The formula to calculate total cost is: Fixed cost + (Variable cost per unit x Number of units). Lamar Inc. can use this formula to determine Fixed cost as: Total cost - (Variable cost per unit x Number of units) = $104,000 - ($184 x 325) = $44,200.

Lamar, Inc., produces snow blowers. The total cost for the month of November is $104,000. During November, Lamar manufactured 325 snow blowers. If the variable cost for one snow blower is $184, what is the fixed cost for November? a) $44,200 b) $104,000 c) $98,300 d) $59,800

d) $450 Contribution margin per unit = Sales price per unit - Variable cost per unit = $620 - $170 = $450.

The Newcastle shop sells 210 kayaks a month. The kayaks sell for $620 each, and their variable cost per unit is $170. If fixed costs are $6,200 per month, what is the contribution margin per unit? a) $440 b) $790 c) 410 d) $450

b) $240 Contribution margin per unit = Sales price per unit - Variable cost per unit = $400 - $160 = $240.

The Riley Company sells 120 surfboards a month. The boards sell for $400 each, and their variable cost per unit is $160. If fixed costs are $4,800 per month, what is the contribution margin per unit? a) $200 b) $240 c) $180 d) $280

c) Both 1 and 2 CVP analysis includes:The behavior of both costs and revenues is linear throughout the relevant range of the activity index. Costs can be classified accurately as either variable or fixed. Changes in activity are the only factors that affect costs. All units produced are sold. When more than one type of product is sold, the sales mix will remain constant. The percentage that each product represents of total sales will stay the same. Sales mix complicates CVP analysis because different products will have different cost relationships.

The assumptions underlying CVP analysis include 1. Costs can be classified accurately as either variable or fixed. 2. All units produced are sold. a) 1 only b) 2 only c) Both 1 and 2 d) Neither 1 nor 2

b) CheckOut Tech's unit contribution margin is 65% and its break-even point in units is 350. To find CheckOut Tech's contribution margin ratio, divide its unit contribution margin by the unit selling price: ($1,200 - $420) ÷ $1,200 = 65%. To find its break-even point in units, divide the firm's total fixed costs by its contribution margin per unit: $273,000 ÷ $780 = 350 units.

CheckOut Tech Inc. sells cash registers for $1,200 each. If the firm's total fixed costs are $273,000 and its variable costs are $420 per unit, then which of the following statements is accurate? a) CheckOut Tech's unit contribution margin is 25% and its break-even point in units is 790. b) CheckOut Tech's unit contribution margin is 65% and its break-even point in units is 350. c) CheckOut Tech's unit contribution margin is 35% and its break-even point in units is 565. d) CheckOut Tech's unit contribution margin is 74% and its break-even point in units is 267.

c) ($2.40 x Number of toys sold) + $2,400 Variable cost = Change in total cost ÷ Change in number of units = ($16,800 - $12,000) ÷ (6,000 - 4,000) = $4,800 ÷ 2,000 = $2.40. Fixed cost (based on low point): (Variable cost per unit x Number of units) + Fixed cost = Total cost ($2.40 x 4,000) + Fixed cost = $12,000. $9,600 + Fixed cost = $12,000. Fixed cost = $12,000 - $9,600 = $2,400.

Children's World Toy Shop is an on-line toy store specializing in handmade stuffed animals. Children's World sold 4,000 of the "Donny the Dragon" stuffed toys in April and 6,000 in May. Shipping costs for the two months were $12,000 and $16,800, respectively. Using these two months' data as a basis for the high-low method, the shipping cost function is best estimated as a) ($1.00 x Number of toys sold) + $8,000 b) ($2.00 x Number of toys sold) + $4,000 c) ($2.40 x Number of toys sold) + $2,400 d) ($0.75 x Number of toys sold) + $9,000

c) The units required will decrease. If costs decrease, the number of units required to meet a target net income also decrease.

Company Y has not changed its selling price nor its total fixed cost but has been able to decrease its unit variable cost. What will happen to the units required to meet its target net income? a) The units required will remain unchanged. b) This cannot be determined from the information given. c) The units required will decrease. d) The units required will increase.

a) A net income of $450. Bill's current net income is $225 [(570 units sold per month x $2.50per unit) - $1,200 fixed cost = $225). Net incomes of $650 or $1,000 may be too much of a stretch right now, and $225 does not create a challenge. Therefore, the best target net income to set as a goal is $450.

Currently, Bill's Bait Shop sells 570 units of bait per month. Bill wants to increase his net income above what he currently earns. If his fixed costs are $1,200 per month and his contribution margin is $2.50 per unit, which of the following is a reasonable goal for Bill to try to reach? a) A net income of $450. b) A net income of $650. c) A net income of $1,000. d) A net income of $225.

a) $2,600 The current net income is $2,100 [(1,200 cupcakes per month x $3 contribution margin per cupcake) - $1,500 fixed costs = $2,100] therefore, the choice of $2,100 would not be an increase and the choice of $1,800 would be a decrease. A net income goal of $5,600 may be too much of a stretch as Sweet Treats Bakery would need to sell 2,367 cupcakes ($5,600 = 3X - $1,500). Therefore, the best target net income to set as a goal is $2,600.

Currently, Sweet Treats Bakery sells 1,200 cupcakes per month. The owners would like to increase net income above what is currently earned. Fixed costs are $1,500 per month and their contribution margin is $3 per cupcake. What would be a reasonable net income goal? a) $2,600 b) $5,600 c) $2,100 d) $1,800

a) Locate the point at which the line crosses the y-axis. A scatterplot can be used to determine the fixed and variable cost components. After the points have been plotted, the fixed cost is the point at which the line crosses the y-axis.

Gretchen owns a coffee shop and wants to determine the fixed and variable costs associated with serving specialty coffee drinks. To do this, she creates a scatterplot of data from the previous year. After Gretchen fits a line to her plotted points, what should she do to determine her fixed cost? a) Locate the point at which the line crosses the y-axis. b) Locate the point at which the line crosses the x-axis. c) Determine the farthest outlying point from the line. d) Determine the average distance between the line and the data points.

a) 57% The process to determine the company's contribution margin is multi-step. First, calculate Units sold as: Sales revenue divided by Cost per putter. Number of units sold = $525,000 ÷ $105 = 5,000. Next, calculate Contribution margin per unit as: Contribution margin divided by Units sold. Contribution margin per unit = $299,250 ÷ 5,000 = $59.85. Then, calculate the Contribution margin ratio as: Unit contribution margin divided by Unit selling price. Contribution margin ratio = $59.85 ÷ $105 = 57%.

Heidi C. sells golf putters specifically designed for petite women. The company's accountant prepared the following income statement for the company's most recent quarter. Sales Revenue$525,000Cost of Goods Sold$180,000Variable Selling Expense27,000Variable General and Administrative Expenses18,750Total Variable Expenses225,750Contribution Margin299,250Fixed Selling Expenses51,000Fixed General and Administrative Expenses96,000Total Fixed Expenses147,000Net Income$152,250 What is the company's contribution margin ratio if each putter sells for $105? a) 57% b) 29% c) 28% d) 43%

b) $294,000 Sales revenue - Variable expenses = Contribution margin. $420,000 - Variable expenses = $126,000 Variable expenses = $420,000 - $ 126,000 = $294,000

Hollow Reeds Manufacturing hired an intern to assist with some accounting duties. The intern is struggling to complete the following CVP income statements. March 31 June 30 Sept. 30 Sales Revenue $ ?$840,000$420,000Variable Expenses420,000??Contribution Margin?560,000126,000Fixed Expenses151,200329,000?Net Income58,800231,00014,700 The intern has asked for your assistance. What amount should be entered for September 30 variable expenses? a) $111,300 b) $294,000 c) $546,000 d) $546,000

b) Margin of safety in dollars/Actual (expected) sales The margin of safety ratio measures the "cushion" that a particular level of sales provides and is computed by taking the margin of safety in dollars divided by the actual sales (expected sales).

How is the margin of safety ratio computed? a) Actual (expected) sales/Margin of safety in dollars b) Margin of safety in dollars/Actual (expected) sales c) Margin of safety in units/Actual (expected) sales in units d) Actual (expected) sales in units/Margin of safety in units

c) Sprockets' fixed costs will drop to $4 per widget, but its total manufacturing costs will increase to $285,000. Last month, the firm's total fixed costs were $60,000, which equates to $60,000/12,000 = $5 per widget. Meanwhile, its total variable costs were $240,000 - $60,000 = $180,000, which equates to $180,000/12,000 = $15 per widget. Next month, the firm expects to make 15,000 widgets. If the firm's total fixed costs are constant, the fixed costs per unit will drop from $5 per widget to $60,000/15,000 = $4 per widget. Meanwhile, the firm's total variable costs will increase to 15,000 x $15 = $225,000. Thus, the firm's total costs for the month will be $225,000 + $60,000 = $285,000.

Last month, Sprockets, Inc., manufactured 12,000 widgets. The firm's total cost for making the widgets was $240,000. Of that amount, $60,000 was due to fixed costs, and the rest was due to variable costs. Next month, Sprockets expects to manufacture 15,000 widgets. Assuming the firm's total fixed costs and variable costs per unit remain the same, which of the following statements is accurate? a) Sprockets' fixed costs will drop to $3 per widget, but its total manufacturing costs will remain constant at $240,000. b) Sprockets' fixed costs will remain at $5 per widget, but its total manufacturing costs will increase to $285,000. c) Sprockets' fixed costs will drop to $4 per widget, but its total manufacturing costs will increase to $285,000. d) Sprockets' fixed costs will drop to $3 per widget, but its total manufacturing costs will increase to $360,000.

a) 60% Contribution margin per unit = Sales price per unit - Variable cost per unit = $15 - $6 = $9. Contribution margin ratio = Contribution margin per unit ÷ Sales revenue per unit = $9 ÷ $15 = 60%.

Major E. has just opened a cooking school focusing on basic meals for new cooks. Each student pays $15 per class and receives all the ingredients necessary to prepare dinner for two using the recipes demonstrated in the class. Major's cost to provide the ingredients is $6.00 per student. To give his students hands-on help, Major employs two assistants for each class and pays each of them $1,200 per month. Major's monthly salary is $1,800. The depreciation on equipment is $1,000 per month and utilities and insurance are $240 per month. What is Major's contribution margin ratio? a) 60% b) 40% c) 150% d) 67%

d) $7.50 Contribution margin is the amount of revenue remaining after deducting variable costs. Contribution margin per unit = Sales price per unit - Variable cost per unit = $12 - $4.50 = $7.50.

Marissa creates fruit baskets to sell to a gift shop. Marissa charges the gift shop $12 for a medium-sized fruit basket. However, it only costs her $4.50 to purchase the fruit, basket, and other supplies. Marissa also has an assistant that she pays $1,400 per month, and Marissa's salary is $2,500 per month. What is Marissa's contribution margin per basket? a) $9.50 b) $12.00 c) $4.50 d) $7.50

b) 35% Margin of safety ratio is computed by taking margin of safety in dollars divided by actual sales (expected sales), ($1,040,000 - $676,000) ÷ $1,040,000 = 35%.

Marlette Manufacturing has actual sales of $1,040,000 and a break-even point of $676,000. What is Marlette's margin of safety ratio? a) 46% b) 35% c) 65% d) 54%

c) $1,320,000. Outdoor Gourmet's unit contribution margin is Price per unit multiplied by the Contribution margin ratio: $275 x 40% = $110. To find fixed costs, multiply this amount by the number of units that must be sold to break-even: $110 x 12,000 = $1,320,000.

Outdoor Gourmet Inc. sells gas grills for $275 each. The contribution margin ratio is 40%. If Outdoor Gourmet needs to sell 12,000 units to break-even, then the firm's fixed costs are a) $2,240,000. b) $1,980,000. c) $1,320,000. d) $3,300,000.

a) 300 Units required to meet target net income = (Total fixed costs + Target net income)/ Contribution margin per unit. ($1,200 + $2,200 + $2,500 + $8,854)/ $49.18* = 300 mattresses*$147 - $89 - ($147 x 6%) = $49.18 = contribution margin per unit. Contribution margin per unit = Sales price per unit - Variable cost per unit.

Paul buys mattresses for $89 and sells them for $147. He pays $1,200 per month to rent his store and $2,200 a month plus a commission of 6% of sales revenue to each of his two sales staff. Paul earns a salary of $2,500 per month. If Paul plans to earn a net income of $8,854 this month, how many mattresses must he sell? a) 300 b) 153 c) 255 d) 180

c) Urban Kicks will need to increase the number of pairs of shoes sold to maintain their net income. If costs increase, the number of units required to meet a target net income will also increase. The other answers either say that increased costs do not affect target net income or are nonsensical.

Recently, suppliers have raised costs so Urban Kicks spends more to make each pair of shoes. Despite these changes, management has managed to keep fixed costs and the selling price the same. What do these changes mean for Urban Kicks? a) Urban Kicks will need to decrease their net income to increase the number of pairs of shoes they can sell. b) Urban Kicks will be able to maintain their net income with a lower level of sales. c) Urban Kicks will need to increase the number of pairs of shoes sold to maintain their net income. d) Urban Kicks will be able to maintain their net income with a lower contribution margin ratio.

c) 33.3% First calculate the contribution margin per unit: Contribution margin per unit = Sales price per unit - Variable cost per unit = $300 - $200 = $100. Next, calculate the contribution margin ratio: Contribution margin ratio = Contribution margin per unit ÷ Sales price per unit = $100 ÷ $300 = 33.3%.

Strobeck Quads sells 75 used four wheelers each month for $300 each. The variable cost per unit is $200, and Quad's fixed costs are $4,200 per month. What is the contribution margin ratio? a) 66.47% b) 20.0% c) 33.3% d) 50.0%

d) $7.00 The cost incurred at 0 level of production is a fixed cost, so the cost equation at a production level of 2,000 shovels is $15,000 = $1,000 + (Variable cost per unit x 2,000). The variable cost per unit = ($15,000 - $1,000) ÷ 2,000 = $7.00.

The Dugger Company produces shovels. If the company produces zero shovels, total cost is $1,000. If the company produces 2,000 shovels, total cost is $15,000. What is the variable cost per shovel? a) $10.00 b) $4.00 c) $12.00 d) $7.00

d) A 10% decrease in variable costs. The total variable costs change in proportion to changes in the levels of activity. If activity levels have decreased by 10%, variable costs will also decrease by 10%.

The Fitzhugh Corporation saw a 10% decrease in activity levels over the fourth quarter. You have been asked what other changes the company should expect because of this decrease. What will you report? a) A 10% increase in fixed costs. b) A 10% decrease in fixed costs. c) A 10% increase in variable costs. d) A 10% decrease in variable costs.

c) $0.10 For each $1.00, 10% or $0.10 ($1.00 x 10%) is generated in contribution margin.

The contribution margin ratio for Carol's Card Shop is 10%. For each $1.00 of sales, how much is generated in contribution margin? a) $1.00 b) $10.00 c) $0.10 d) $100.00

d) $0.15 For each $1.00, 15% or $0.15 ($1.00 x 15%), is generated in contribution margin. The contribution margin would be calculated by taking the contribution margin ratio and multiplying it by the dollar unit price.

The contribution margin ratio for Cuts Incorporated hair salon is 15%. For each $1.00 of sales, how much is generated in contribution margin? a) $1.00 b) $15.00 c) $150.00 d) $0.15

d) the greater the margin of safety. The margin of safety ratio is the relationship between the margin of safety and expected sales, a higher margin of safety ratio reflects a greater margin of safety.

The higher the margin of safety ratio a) the higher the break-even point in units. b) the lower the margin of safety. c) the lower the dollar amount of the margin of safety. d) the greater the margin of safety.

a) Its purpose is to measure the relationship between contribution margin and sales revenue. Contribution margin ratio is the percentage of each dollar of sales that is available to apply to fixed costs and contribute to net income. It is calculated as Unit contribution margin divided by Unit selling price.

What is the purpose of the contribution margin ratio? a) Its purpose is to measure the relationship between contribution margin and sales revenue. b) Its purpose is to measure the relationship between contribution margin and gross profit. c) Its purpose is to measure the relationship between the variable expenses and the contribution margin. d) Its purpose is to measure the relationship between the profit ratio and the gross margin ratio.

d) a horizontal line beginning at the vertical axis When a graph is prepared with total activity on the horizontal axis and total cost on the vertical axis, the line depicting a fixed cost look will be a horizontal line beginning at the vertical axis because fixed costs are constant across the relevant range of activity.

When a graph is prepared with total activity on the horizontal axis and total cost on the vertical axis, what will the line depicting a fixed cost look like? a) a line sloping up from a non-zero point on the vertical axis b) a line sloping up from the intersection of $0 and 0 activity c) a series of horizontal lines connecting discrete cost points d) a horizontal line beginning at the vertical axis