Which of the following is a step followed by an analyst to overcome problems related to data collection for estimating cost function?
A) to use cash accounting
B) to consider fixed costs as variable costs and treat allocated fixed cost per unit as a variable cost
C) to eliminate unusual observations if extreme values of observations occur
D) to include the inflationary price effects in the data

Question

Quizplus · Accepted Answer

To overcome problems related to data collection for estimating cost function, an analyst should eliminate unusual observations if extreme values of observations occur. This will ensure that the data is more accurate and representative of typical costs. Using cash accounting (A) would not improve the accuracy of the data, as it would only change the timing of when costs are recorded. Treating fixed costs as variable costs and allocating fixed costs per unit (B) would not accurately reflect the true nature of fixed costs. Including inflationary price effects in the data (D) may be necessary, but it wouldn't necessarily address data collection issues.

Which of the Following Is a Step Followed by an Analyst