question 31

a better database for estimating cost function has the following characteristics

1-there is no causal , economically plausible relationship between individual cost items in a heterogeneous mixed pool and a single cost driver

2 time periods differ for measuring items included in the dependent variable and the cost driver

3- fixed costs are allocated as if they are variable costs

4 homogeneous relationship between individual cost items in the dependent variable pool and cost drivers may not be present

5 - extreme observations are adjusted or removed