Why is managerial judgment critically important in gathering information about costs?
A) It is necessary to understand revenues.
B) It is important in determining cost behaviour.
C) Costs are enhanced by only by new managers.
D) It helps to broaden statistical estimation results.

Question

Quizplus · Accepted Answer

Managerial judgment is critical in determining cost behaviour, as it allows managers to make informed decisions about the level of cost incurred for each unit of output, the relationship between costs and activity levels, and the viability of cost reduction or containment initiatives. Without the use of managerial judgment, cost estimates may be inaccurate and may lead to incorrect business decisions.

Why Is Managerial Judgment Critically Important in Gathering Information About