What two assumptions are frequently made when estimating a cost function?
1. Variations in the level of a single activity (the cost driver) explain the variations in the related total cost
2. Cost behavior is approximated by a linear cost function within the relevant range. A linear cost function is a cost function where, within the relevant range, the graph of total costs versus the level of a single activity forms a straight line.
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.