Question

figure 1

graph 1
$
total units produced

graph 2
$
total units produced

graph 3
$
total units produced

graph 4
$
total units produced

which of the graphs in figure 1 illustrates the behavior of a total fixed cost?
a. graph 3

Explanation:

Define total fixed cost behavior

Using the Fixed Cost knowledge point

A total fixed cost remains constant in total dollar amount regardless of changes in the activity level (total units produced) within a relevant range.

Analyze the graphs in Figure 1

Using the Cost Classification knowledge point

• Graph 1 shows a horizontal line, indicating that the total cost in dollars remains constant as the total units produced increase.
• Graph 2 shows a cost that starts above zero and increases linearly, representing a mixed cost.
• Graph 3 shows a cost that starts at zero and increases linearly, representing a total variable cost.
• Graph 4 shows a cost that increases in steps, representing a step cost.

Match behavior to the correct graph

Using the Fixed Cost knowledge point

Since total fixed cost does not change with production volume, its behavior is represented by a flat, horizontal line. This matches Graph 1.

Answer:

• (b) Graph 1 (Correct answer)
• (a) Graph 3
• (c) Graph 2
• (d) Graph 4