An automobile manufacturer changes from using skilled labour to using computer-controlled assembly procedures.What impact will the past data have with respect to costs?
A)Past data is useful in predicting future costs.
B)Past data is of little or no value in predicting future costs.
C)Past data is should be used without adjustments to predict future costs.
D)Past data is representative of future costs.

Question

Quizplus · Accepted Answer

Past data may not be relevant or accurate in predicting future costs when there is a significant change in the production process (from skilled labour to computer-controlled assembly). The new process may have different cost drivers and variables that were not present in the past, making past data of little or no value in predicting future costs.

An Automobile Manufacturer Changes from Using Skilled Labour to Using