If cost accountants decide to use production of prior periods as a cost driver for repair cost of the current period they understand that
A) there is no correlation between repair costs and levels of production
B) repair costs tend to lag periods of high production
C) cost accountants do not need to understand operations
D) there is no cause-and-effect between production and repair costs

Question

Quizplus · Accepted Answer

Choosing production of prior periods as a cost driver for repair costs acknowledges that there may be a correlation between periods of high production and repair costs that follow afterwards. This suggests that repair costs may be higher after increased production due to wear and tear on machines, for example.

If Cost Accountants Decide to Use Production of Prior Periods