Allocating Fixed Costs on the Basis of Long- Range Plans

question 78

Multiple Choice

Allocating fixed costs on the basis of long- range plans may inadvertently encourage managers to:

• A) underutilize available capacity
• B) underestimate planned usage
• C) overestimate planned cost
• D) overestimate planned usage

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Definitions:

Discriminant Analysis

A statistical technique used to classify observations into predefined categories based on several predictor variables.

Multiple Regression

A statistical technique whereby several variables are used to predict one.

Analysis of Variance

A statistical method used to compare the means of three or more samples to understand if at least one of the sample means significantly differs from the others.