Which Characteristic Is True of the High-Low Method,the Scattergraph Method,and

question 118

Multiple Choice

Which characteristic is true of the high-low method,the scattergraph method,and regression analysis?

• A) All methods will produce the same estimate of variable and fixed costs.
• B) All methods use historic data to estimate variable and fixed costs.
• C) All methods use only two data points in analyzing a mixed cost.
• D) None of these are correct.

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Definitions:

Discount Rate

In the realm of discounted cash flow analysis, this is the interest rate used for estimating the present value of future financial inflows.

Anticipated Annual Incremental

Expected yearly increases in revenue or benefits as a result of a particular action or investment, not considering future inflation or changes in currency value.

Salvage Value

The anticipated market value of an asset after its period of utility has ended.

Payback Period

The duration required for an investment to produce income or cash flow that matches the investment's initial cost.