In estimation of cost function, an example of independent variable is

A. level of activity

B. quantity stored

C. quantity manufactured

D. quality of product

Answer: Option A

Solution(By Examveda Team)

In estimation of cost function, an example of independent variable is level of activity. The activity level is the amount of an activity used by a cost object. The concept is employed in activity-based costing. If the activity level can be reduced, then activity costs should decline, thereby reducing the overall expenditure level of a business.