Final answer:
Variable costs on a graph appear as straight lines that start at zero and increase proportionally with levels of activity, indicating the cost increase associated with producing more goods or services.
Step-by-step explanation:
When variable costs are plotted on a graph of cost and volume, they appear as straight lines starting at the zero cost level. This line is directly proportional; it rises as levels of activity increases, representing the increase in costs associated with producing more goods or services. At zero production, the fixed costs, such as $160 in the provided example, are still present. As production increases, the variable costs are added to the fixed costs, making the total cost the sum of the two. The relationship between the quantity of output produced and the cost of producing that output is depicted in graphs where the fixed costs are the vertical intercept of the total cost curve, which is the cost incurred when no output is generated, hence no variable costs.
When variable costs are plotted on a graph of cost and volume, they appear as a line starting at the zero cost level. This line is upward sloping; it rises as the volume of activity increases.
For example, let's say a company produces widgets. The fixed costs of $160 are incurred regardless of the production volume. However, the variable costs, such as labor and materials, depend on the volume of widgets produced. As the company produces more widgets, the variable costs increase, leading to an upward sloping line on the graph.