The Limitation of Covariance as a Descriptive Measure of Association

question 27

Multiple Choice

The limitation of covariance as a descriptive measure of association is that it

• A) only captures positive relationships
• B) does not capture the units of the variables
• C) is very sensitive to the units of the variables
• D) is invalid if one of the variables is categorical
• E) none of these options

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Definitions:

Support Department Costs

Expenses incurred by service departments that do not directly produce goods but support other departments that do.

Total Janitorial Costs

The complete expenses associated with cleaning and maintaining a facility.

Market Value

The current price at which an asset or service can be bought or sold in the open market, subject to supply and demand.

Reciprocal Services Method

A method used in cost accounting to allocate costs between interdependent departments, acknowledging mutual services they provide to each other.