1.

One assumption frequently made in cost behavior estimation is that changes in total
costs can be explained by changes in the level of a single activity.

Answer: True Difficulty: 1 Objective: 1

Terms to Learn: cost estimation

2. All cost functions are linear.

Answer: False Difficulty: 1 Objective: 1

Terms to Learn: cost function
All cost functions are not linear, but for cost-behavior estimation we assume some are
linear within a relevant range.

3. When estimating a cost function, cost behavior can be approximated by a linear cost
function within the relevant range.

Answer: True Difficulty: 2 Objective: 1

Terms to Learn: cost estimation, cost function

4. y = a + bX represents the general form of the linear cost function.

Answer: True Difficulty: 1 Objective: 2

Terms to Learn: cost function, linear cost function

5. A linear cost function can only represent fixed cost behavior.

Answer: False Difficulty: 1 Objective: 2

Terms to Learn: cost function, linear cost function
A linear cost function can represent fixed, mixed, or variable cost behavior.