Which of the following statements is true?
A) There is a cause-and-effect relationship between the cost driver and the amount of cost.
B) Fixed costs have cost drivers over the short run.
C) Over the short run all costs have cost drivers.
D) Volume of production is a cost driver of distribution costs.

Question

Quizplus · Accepted Answer

A cost driver is a factor that causes a change in the cost of an activity. In other words, there is a cause-and-effect relationship between the cost driver and the amount of cost. This statement is true, while the other statements are false. Fixed costs do not have cost drivers over the short run, and not all costs have cost drivers over the short run. The volume of production is not a cost driver of distribution costs specifically, as other factors such as distance, mode of transportation, and packaging can also impact distribution costs.

Which of the Following Statements Is True