Which of the following is not a representation of a cause-and-effect relationship?
A)A physical relationship between the level of activity and costs.
B)Units of production are used as the activity that affects direct material costs.
C)A contractual agreement.
D)Knowledge of operations.
E)A contract that fails to specify the number of parts used as the activity measure of ordering costs.

Question

Quizplus · Accepted Answer

A contract that fails to specify the number of parts used as the activity measure of ordering costs does not establish a clear cause-and-effect relationship, as it lacks a direct link between the activity and the costs incurred.

Which of the Following Is Not a Representation of a Cause-And-Effect