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Analogy, Expert Opinion, & Factors Fuandamental

An analyst was developing a cost factor to estimate non-recurring tooling as a function of the recurring tooling cost. If the factor was constructed as:

Nonrecurring Tooling Cost
--------------------------------------
Total (Recurring + Nonrecurring) Tooling Cost

The mistake was:

A) Recurring tooling would not be a good cost driver

B) You can't have a factor with a cost-to-cost relationship

C) The total cost should be in the numerator

D) Nonrecurring costs were included in the denominator

Solution Preview

D) Nonrecurring costs were included in the denominator

Nonrecurring costs are ...

Solution Summary

The mistake was:

A) Recurring tooling would not be a good cost driver

B) You can't have a factor with a cost-to-cost relationship

C) The total cost should be in the numerator

D) Nonrecurring costs were included in the denominator

$2.19