The strength of relationship between cost driver and cost is considered as __________?
Correct answer: A. goodness of fit
- A. goodness of fit
- B. goodness of residual
- C. badness of fit
- D. badness of residual
Explanation
Goodness of fit describes the strength of the relationship between the cost driver and the cost, or how closely the estimated values match actual values. Badness of fit is not the standard term used here.
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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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