Question

When production volume and costs are graphed , units of product (volume) is usually plotted on the ___________ because it __________ at all levels of production.

Answer 1

Units of product (volume) are plotted on the horizontal axis in cost-volume graphs because it represents the output at all levels, with fixed costs shown as the vertical intercept when production is zero.

Step-by-step explanation:

When production volume and costs are graphed, units of product (volume) are usually plotted on the horizontal axis because it represents the quantity of output produced at all levels of production. This set-up allows for the analysis of how costs change as production levels vary. In this scenario, fixed costs are displayed as the vertical intercept of the total cost curve, indicating the costs incurred when output is zero - thus, without consideration of variable costs.

Consequently, as production increases, we see a proportional rise in variable costs added to fixed costs, creating the total cost. This graphical illustration highlights the relationship between the quantity of output produced and the cost of producing that output.