If the residual error is 51 and the predicted cost value is 37, then the observed cost value will be ___________?
Correct answer: B. 88
- A. 14
- B. 88
- C. 24
- D. 68
Explanation
Because residual error equals observed cost minus predicted cost, observed cost = 51 + 37 = 88. Subtracting would reverse the residual relationship.
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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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