A cause-and-effect relationship, relative to cost drivers and resulting costs, may develop because of physical relationships, contractual relationships, or implicit relationships.

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A cause-and-effect relationship can develop due to physical relationships (such as the materials used affecting the cost of production), contractual relationships (such as pricing agreements with suppliers affecting the cost of materials), or implicit relationships (such as a higher demand for a product leading to increased production costs).

A Cause-And-Effect Relationship, Relative to Cost Drivers and Resulting Costs