Advantages of the Method of Least Squares Over the High-Low

question 54

Multiple Choice

Advantages of the method of least squares over the high-low method include all of the following except

• A) a statistical method is used to mathematically derive the cost function.
• B) only two points are used to develop the cost function.
• C) the squared differences between actual observations and the line (cost function) are minimized.
• D) All the observations have an effect on the cost function.

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Definitions:

Net Income

The net income of a company, which is the remaining amount of total revenue after deducting all expenses and taxes.

Inventory

The total amount of goods and materials held by a company intended for sale or production.

Net Income

It represents the amount of money that remains after subtracting all operating expenses, taxes, and costs from total revenue – a key indicator of a company's financial health.