An assumption, which states that there must be linear relationship between independent variable and dependent variable is __________?
Correct answer: B. relevant range of linearity
- A. irrelevant range of linearity
- B. relevant range of linearity
- C. significant range
- D. insignificant range
Explanation
The relevant range is the normal activity interval within which the assumed linear relationship between the independent and dependent variables is expected to hold. Outside that range, cost behavior may change.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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