What criteria are available in determining which of two alternate cost function estimates is better for a particular management decision?
A) goodness of fit
B) economic plausibility
C) the significance of the difference between the costs associated with the highest and lowest observations of the cost driver
D) the significance of the difference between the unit values for the highest and lowest observations of the cost driver
E) the goodness of fit and economic plausibility

Question

Quizplus · Accepted Answer

Generally, the best criteria for determining which of two alternate cost function estimates is better are goodness of fit and economic plausibility. Goodness of fit is important because it reflects how well the model fits the data. Economic plausibility is important because it ensures that the cost function estimates make logical sense in the context of the business and industry. While the other criteria listed may be useful in some situations, they are generally less important than goodness of fit and economic plausibility.

What Criteria Are Available in Determining Which of Two Alternate