The line which uses to join observations with lower and highest values of cost driver is called ___________?
Correct answer: A. straight line
- A. straight line
- B. curved line
- C. horizontal line
- D. vertical line
Explanation
When cost is assumed to change systematically with the cost driver, the observations are connected by a straight line. A curved line would imply a nonlinear cost 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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