Economic plausibility is an important criterion for choosing a cost driver.

Name: Economic plausibility is an important criterion for choosing a cost driver.
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Question

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Economic plausibility means that the chosen cost driver should have a logical and reasonable correlation with the costs that are being allocated. Therefore, choosing a cost driver that does not have economic plausibility can lead to inaccurate cost allocations and misinformed decision-making.

Economic Plausibility Is an Important Criterion for Choosing a Cost