Which of the Following Is True About the Visual Fit

question 44

Multiple Choice

Which of the following is true about the visual fit method?

• A)The visual fit method is the most objective way to fit a line to cost data using a scattergraph.
• B)Although a scattergraph can be created by hand,the visual fit method of determining total fixed costs and variable costs per unit must be completed by computer.
• C)Assuming the relationship between total cost and activity is (mostly)linear the visual fit method is an approximation of total fixed costs and variable costs per unit.
• D)If the scattergraph shows there is not a linear relationship between total costs and activity,the visual fit method can give a close approximation of total fixed costs and variable costs per unit.

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Definitions:

Retained Earnings Account

An equity account that represents the accumulated portion of net income not distributed to shareholders in the form of dividends.

Current Ratio

A financial liquidity metric that compares a company's current assets to its current liabilities, used to evaluate its ability to pay short-term obligations.

Temporary Accounts

Accounts that track revenues and expenses within a specific accounting period and are reset to zero at the period’s end.

Prepaid Rent

A type of asset account on the balance sheet that represents rent payments made in advance of the rental period.