Question 1
The ideal database for estimating cost functions contains ________.
◦ numerous cost driver observations
◦ only the independent variable and not the dependent variable
◦ cost driver observations spanning a narrow range
◦ a few values of the cost driver that are grouped closely together
Question 2
Which of the following is a problem related to cost analysis?
◦ fixed costs are allocated as if they are variable costs
◦ extreme observations are adjusted or removed
◦ a company keeps accounting records on the accrual basis
◦ inflationary effects are removed