The Method of Least Squares

question 44

Multiple Choice

The method of least squares

• A) uses the results of regression analysis to construct a cost formula.
• B) is the least accurate method.
• C) analyzes a cost relationship by plotting the data points on a graph.
• D) can easily be calculated by hand.

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Definitions:

Fixed Cost

Costs that do not change with the level of output produced, such as rent, salaries, and insurance.

Variable Cost

A cost that changes in proportion to the level of activity or volume of output.

Wages And Salaries

Compensation paid to employees for their labor, with wages typically being hourly rates and salaries being fixed annual amounts.

Activity Variance

The difference between the budgeted amount of activity and the actual amount of activity, which can impact costs and operational efficiency.