Q475
In estimation of cost function, an example of independent variable is
A.
level of activity
AnswerB.
quantity stored
C.
quantity manufactured
D.
quality of product
Answer: Option A
Solution
Answer: Option A
Solution:
In estimation of cost function, an example of independent variable is level of activity. The activity level is the amount of an activity used by a cost object. The concept is employed in activity-based costing. If the activity level can be reduced, then activity costs should decline, thereby reducing the overall expenditure level of a business.