4 it can be inferred that when there is a high correlation between two variables one 4309437

4) It can be inferred that when there is a high correlation between two variables, one is the cause of the other.

5) An example of a physical cause-and-effect relationship is when additional units of production increase total direct material costs.

6) Managers should use past data to create a cost function and then use the exact information provided by that cost function to create the budgetary forecast for the next year.

7) What are the two assumptions behind a simple linear cost function? Briefly explain the three ways that a linear cost function may behave?

1) The conference method estimates cost functions:

A) using quantitative methods that can be very time consuming and costly

B) based on analysis and opinions gathered from various departments

C) using time-and-motion studies

D) by mathematically analyzing the relationship between inputs and outputs in physical terms

2) The account analysis method estimates cost functions:

A) by classifying cost accounts as variable, fixed, or mixed based on qualitative analysis

B) using time-and-motion studies

C) at a high cost, which renders it seldom used

D