Which of the Following Is a Weakness of the Regression

question 98

Multiple Choice

Which of the following is a weakness of the regression method of cost estimation?

• A)The method is not particularly useful when the physical relation between inputs and outputs is indirect.
• B)The method is subjective.
• C)The method requires that several relatively strict assumptions be satisfied.
• D)The method is based on studies of what future costs should be rather than what past costs have been.

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Definitions:

Completed-Contract Method

An accounting method where revenue and profit are recognized only when a contract is completed, commonly used in long-term project contracts.

Long-Term Contracts

Agreements that specify performance obligations and financial terms for periods typically longer than one year.

Percentage-Of-Completion Method

An accounting method used to recognize revenue and expenses of long-term projects proportionally to the work completed.

Revenue Recognition

The accounting principle that outlines the specific conditions under which revenue is recognized and recorded.