Answer
I don't agree with the statement. In a regression analysis used to estimate a cost function, it's common to include multiple independent variables. However, not all of these independent variables are necessarily cost drivers. Cost drivers are the specific factors that directly influence and explain the variations in the dependent variable (typically a cost). Some independent variables in the regression model might be included for other reasons, such as controlling for their effects or improving the model's fit, but they may not be the primary cost drivers. The challenge in regression analysis is to identify and isolate the true cost drivers among the independent variables.
Work Step by Step
I don't agree with the statement. In a regression analysis used to estimate a cost function, it's common to include multiple independent variables. However, not all of these independent variables are necessarily cost drivers. Cost drivers are the specific factors that directly influence and explain the variations in the dependent variable (typically a cost). Some independent variables in the regression model might be included for other reasons, such as controlling for their effects or improving the model's fit, but they may not be the primary cost drivers. The challenge in regression analysis is to identify and isolate the true cost drivers among the independent variables.
