When developing cost functions,which of the following statements is FALSE?
A) The cost function must be believable.
B) The cost function should explain past cost behavior.
C) Personal observations of costs and activities provide the best evidence of a plausible relationship between a cost and its cost driver.
D) The cost function does not have to be plausible.

Question

Quizplus · Accepted Answer

The statement "The cost function does not have to be plausible" is false. A cost function must be plausible and make sense based on observations and past cost behavior. It should also be based on reliable data and evidence rather than subjective personal observations. Ultimately, a believable and plausible cost function is essential for effective cost management and decision-making.

When Developing Cost Functions,which of the Following Statements Is FALSE