Which ofthe following is true about the hypothesis test of cost parameters?
A)It shows the difference between predicted and actual costs.
B)It indicates whether the parameters are different from zero.
C)It provides a range of values instead of a single prediction.
D)It measures the degree of association between cost and activity output.

Question

Quizplus · Accepted Answer

The hypothesis test of cost parameters is used to determine whether the parameters (coefficients) in a cost function are different from zero. This is important because if a parameter is not significantly different from zero, it can be removed from the cost function, simplifying the model and improving its accuracy. The hypothesis test does not show the difference between predicted and actual costs (choice A), provide a range of values (choice C), or measure the degree of association between cost and activity output (choice D).

Which Ofthe Following Is True About the Hypothesis Test of Cost