After estimating a past cost function, managers:
I. May need to update it for future changes.
II. Have all of the information they need to predict future costs
III. May or may not use it to estimate future costs.
A) I only
B) II only
C) II and III only
D) I and III only

Question

Quizplus · Accepted Answer

Although a past cost function provides useful information for estimating future costs, managers may need to update it for changes in the future. Additionally, managers may choose to use other methods alongside the past cost function to estimate future costs, and are not limited to using only the information provided by the past cost function. Therefore, statements I and III are both true, but II is not necessarily true.

After Estimating a Past Cost Function, Managers