When estimating cost behaviours, the appropriateness of the drivers can be tested by measuring the strength of the relationship between
A) past costs and their selected cost driver.
B) past costs and future costs.
C) past costs and predicted costs.
D) predicted costs and their selected driver.

Question

Quizplus · Accepted Answer

The appropriateness of cost drivers can be tested by measuring the strength of the relationship between past costs and their selected cost driver. This helps to determine whether the cost driver is a good predictor of costs and allows for more accurate cost estimates. Measuring the relationship between past and future costs, or predicted costs and their selected driver, does not necessarily provide insight into the appropriateness of the cost driver.

When Estimating Cost Behaviours, the Appropriateness of the Drivers Can