Discuss any 2 criterion which are often used to evaluate cost drivers.
Discuss any 2 criterion which are often used to evaluate cost drivers.
Homework Answers
Two criteria often used to evaluate cost drivers are:
Economic plausibility:- There is a need to check whether cost driver and the level of costs seem to be related? Does it make sense that an increase in the independent variable will cause an increase in the costs?
Significance of the independent variable:- If the regression line (or total cost line) has a steep slope, this indicates a strong relationship between the cost driver and the costs incurred.
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Discuss any 2 criterion which are often used to
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