The 'independent variable':
A)is also referred to as the 'cost driver'.
B)should have an economically plausible relationship with the dependent variable.
C)may also be called the 'cost-allocation base' if referring to an indirect cost.
D)All of these answers are correct.

Question

Quizplus · Accepted Answer

All of the statements are correct. The independent variable is the variable that is manipulated or controlled in order to determine its relationship with the dependent variable. It is often referred to as the 'cost driver' in cost analysis as it is the variable that is responsible for the variation in the dependent variable (typically costs). The independent variable should have an economically plausible relationship with the dependent variable in order to make meaningful predictions about the behavior of the dependent variable. If the independent variable is used to allocate indirect costs, it may be called the 'cost-allocation base'.

The 'Independent Variable