Which of the Following Is an Advantage of Using the Scatter-Graph

question 68

Multiple Choice

Which of the following is an advantage of using the scatter-graph method over the high-low method to estimate costs?

• A) It is a statistical method to determine "best fit".
• B) A cost analyst can review the data visually and eliminate outliers.
• C) The quality of the cost formula relies on the objective judgment of the analysts.
• D) The cost formula can be determined simply by looking at two points of data.

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Definitions:

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company.

Accounts Receivable Period

measures the average number of days it takes a company to collect payment after a sale has been made, indicating the efficiency of its credit policies.

Cost of Goods Sold

Represents the total cost directly tied to the production or acquisition of the goods sold by a company during a specific period.