The cause and effect relationship between activity and costs is the result of __________?
Correct answer: D. all of above
- A. contractual agreement
- B. knowledge of operations
- C. measureable unit relationship
- D. all of above
Explanation
A cause-and-effect cost relationship may be established through contracts, operational knowledge, or a measurable unit relationship. Therefore, all the listed bases can support the 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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