118 Understanding the Numbers is called visual fit because one simply draws a straight line through the data that “best fits” the pattern (see Exhibit ). The point where this line intersects the y-axis yields an estimate of the fixed cost component—those costs that exist even without any sales activity. The slope of the line drawn is defined mathematically as: rise over run or change in y-axis values divided by the change in x-axis values. Using business rather than mathematical terminology, how much the total costs change (the y-axis or rise) as the sales volume changes (the x-axis or run). As.
