Estimating a cost function using past cost data to help determine future costs is useful if:
A) Past costs are irrelevant and highly discretionary
B) Past costs are irrelevant and not discretionary
C) Past costs are relevant and highly discretionary
D) Past costs are relevant and not discretionary

Question

Quizplus · Accepted Answer

Estimating a cost function using past cost data is only useful if past costs are relevant and not discretionary. Relevant costs are those costs that are directly related to producing a product or providing a service. Non-discretionary costs are those costs that are difficult to change in the short-term, such as rent, salaries, and insurance. By using past cost data that includes relevant and non-discretionary costs, a cost function can be developed that can help estimate future costs and make better business decisions.

Estimating a Cost Function Using Past Cost Data to Help