The method of managerial judgement in determining the cost behavior uses:
A)a manager's experience and past observation of cost relationships to determine fixed and variable costs.
B)a manager's skills in determining practical capacity.
C)a manager's past observation to distinguish flexible resources and committed resources.
D)a manager's ethical focus to determine step-variable costs and step-fixed costs.

Question

Quizplus · Accepted Answer

The method of managerial judgement relies on a manager's experience and past observation of cost relationships to determine fixed and variable costs. This approach is subjective but can be useful when there is not enough data available to use more quantitative methods like regression analysis.

The Method of Managerial Judgement in Determining the Cost Behavior