Many organizations use a linear relationship with a single cost driver to describe a cost even though the cost may have multiple cost drivers.Why?
A) This approach is easier and less expensive.
B) The cost of developing a more complex function is greater than the benefit.
C) Cost estimates from the simple function are accurate enough for most decisions.
D) All of the above

Question

Quizplus · Accepted Answer

The use of a linear relationship with a single cost driver, despite the presence of multiple cost drivers, is chosen because it is simpler and less expensive to implement, the cost of developing a more complex function often outweighs the benefits, and the estimates provided by the simpler function are generally accurate enough for most decision-making purposes.

Many Organizations Use a Linear Relationship with a Single Cost