What assumption (s) are frequently made when estimating a cost function? A. Variations in the level of a single activity explain the variations in the related total costs. B. Cost behavior is approximated by a linear function within the relevant range. C. Both of the above. D. Neither of the above.

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Cullen

Business

14 April, 08:20

What assumption (s) are frequently made when estimating a cost function? A. Variations in the level of a single activity explain the variations in the related total costs. B. Cost behavior is approximated by a linear function within the relevant range. C. Both of the above. D. Neither of the above.

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Short Shorts · Answer 1

Answer: The correct answer is "C. Both of the above.".

Explanation: Generally, when estimating a cost function, assumptions are frequently made that the variations in the level of a single activity have as a consequence and are the cause of the variations that occur in the total related costs.

It is also assumed that the behavior of a cost can be approximated through a linear function within the relevant range.