When Evaluating and Choosing Cost Drivers All of the Following

question 144

Multiple Choice

When evaluating and choosing cost drivers all of the following are true EXCEPT:

• A)the cost driver is economically plausible.
• B)there is a significance of effect of the independent variable
• C)there is an independent verification of the relationship by a committee of cost accountants
• D)there is a goodness of fit between the various data points and the regression line

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Definitions:

Capital Goods

Long-lasting goods used in the production of other goods or services, such as machinery, tools, and buildings.

Consumer Goods

Finished products consumed by individuals or households to satisfy their immediate wants or needs, such as food, clothing, and electronics.

Limited Partnerships

A form of partnership consisting of one or more general partners, who manage the business and assume legal debts and obligations, and one or more limited partners, who are liable only to the extent of their investments.

Corporate Income Taxes

Taxes imposed on the net income or profit of corporations, calculated after deducting expenses like cost of goods sold and wages.