The relationship between change in activity and change in total costs is considered as __________?
Correct answer: A. cause and effect relationship
- A. cause and effect relationship
- B. fixed relationship
- C. ineffective relationship
- D. variable relationship
Explanation
A cause-and-effect relationship explains how a change in an activity, such as production volume, causes a change in total cost. This relationship is the basis for analyzing cost behavior.
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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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