Which of the following statements related to assumptions about estimating linear cost functions is FALSE?
A)Variations in a single cost driver explain variations in total costs.
B)A cost object is anything for which a separate measurement of costs is desired.
C)A linear function approximates cost behavior within the relevant range of the cost driver.
D)A high correlation between two variables ensures that a cause-and-effect relationship exists.

Question

Quizplus · Accepted Answer

A high correlation between two variables does not necessarily mean that there is a cause-and-effect relationship between them. Correlation simply measures the extent to which two variables move together. A cause-and-effect relationship requires additional evidence to establish.

Which of the Following Statements Related to Assumptions About Estimating