Which statement related to assumptions about estimating linear cost functions is FALSE?
A)A cost object is anything for which a separate measurement of costs is desired.
B)A linear function approximates cost behaviour within the relevant range of the cost driver.
C)Variations in a single cost driver explain variations in total costs.
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 there is a cause-and-effect relationship. It is possible for a correlation to exist between two variables without there being an actual cause-and-effect relationship.

Which Statement Related to Assumptions About Estimating Linear Cost Functions