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11 machine hours is a more economically plausible cost driver of machine maintenance 4300583

 

11) Machine-hours is a more economically plausible cost driver of machine maintenance than number of direct manufacturing labor-hours.

 

12) The larger the vertical difference between actual costs and predicted costs the better the goodness of fit.

 

13) Choosing an economically plausible cost driver for indirect costs is fairly simple and knowledge of operations is unnecessary.

 

14) A flat or slightly sloped regression line indicates a strong relationship.

 

15) To implement ABC systems, managers must identify a cost driver for each activity.

16) Activity-based costing systems use the quantitative analysis method exclusively for cost estimation because of its accuracy.

 

17) Economic plausibility is an important criterion for choosing a cost driver.

 

18) What are the three criteria a company should use to evaluate and choose a cost driver? Briefly explain each of the three criteria.

 

 

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