The Identification of Cost Drivers Is Perhaps the Most Important

question 117

Multiple Choice

The identification of cost drivers is perhaps the most important step in developing the cost estimate because:

• A) It is the first step in cost estimation.
• B) It is the final step in cost estimation.
• C) There may be a number of relevant drivers, some not immediately obvious.
• D) The other steps are easier to execute.
• E) It requires much more time than the other steps.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services provided on credit.

Income Tax Expense

The amount of money a company pays in taxes based on its earnings.

Statement of Cash Flows

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company, highlighting the business's operating, investing, and financing activities.

Sales Adjusted

Sales adjusted refers to the revenues after making necessary adjustments for returns, allowances, and discounts to the gross sales figure.