The Scatterplot Method of Cost Estimation

question 21

Multiple Choice

The scatterplot method of cost estimation

• A)is influenced by extreme observations.
• B)requires the use of judgment.
• C)uses the least-squares method.
• D)is superior to other methods in its ability to distinguish between discretionary and committed fixed costs.

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Definitions:

Sales

The total revenue a company generates from selling goods or services over a specific period of time.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year or the business cycle, whichever is longer.

Fixed Assets

Long-term tangible assets used in the operation of a business and not expected to be converted into cash within a year.

Return on Investment

measures the gain or loss generated from an investment relative to its cost, providing insight into the efficiency of the investment.