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All the independent variables in a cost function estimated with regression analysis are cost drivers. Do you agree?

1) Yes
2) No

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Final answer:

All the independent variables in a cost function estimated with regression analysis are considered cost drivers.

Step-by-step explanation:

In a cost function estimated with regression analysis, the independent variables represent cost drivers. Cost drivers are the factors that influence the cost of a product or service. They could include variables such as the size of the product, the number of pages, the distance, or any other variable that has a relationship with the cost.

For example, if we are estimating a cost function for a manufacturing company, the independent variables could be the size of the product, the number of machines used, and the production time. These variables can help us determine how the cost varies with respect to these factors.

Therefore, all the independent variables in a cost function estimated with regression analysis are considered cost drivers. If outliers are present in the data, it's important to consider whether they should be removed. Outliers can be indicative of special causes that need to be accounted for, or they might be errors in data collection.

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