Which of the Four Types of Cost Drivers-Activity-Based, Volume-Based, Structural

question 47

Multiple Choice

Which of the four types of cost drivers-activity-based, volume-based, structural and executional-are often best related to linear cost estimation methods?

• A) Activity-based only.
• B) Activity-based and volume-based.
• C) Structural and volume-based.
• D) Executional and volume-based.
• E) Structural and executional.

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Definitions:

Moral Hazard

A situation in economics and finance where one party takes more risks because another party bears the cost of those risks.

Auto Insurance

A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident or other vehicle-related damages.

Precautions

Actions taken in advance to prevent potential undesirable outcomes or to minimize risks.

Moral Hazard

A situation where one party in a transaction has the opportunity to assume additional risks that negatively affect the other party because they do not bear the full consequences of their actions.