An algebraic equation used by managers to describe the relationship between a cost and its cost driver(s) is called a
A) cost behaviour.
B) cost function.
C) budget.
D) cost analysis.

Question

Quizplus · Accepted Answer

A cost function is an algebraic equation used by managers to describe the relationship between a cost and its cost driver(s). It helps to predict costs at different levels of activity and makes it easier to estimate the cost of producing a certain number of units or providing a certain level of service. Cost behaviour refers to how costs change in response to changes in activity levels, but it's not an equation. A budget is a plan for how to allocate resources, and cost analysis is a method used to determine the actual costs of a particular activity or project.

An Algebraic Equation Used by Managers to Describe the Relationship