The Least-Squares Regression Method

question 9

Multiple Choice

The least-squares regression method:

• A)fits a line to data by minimizing the sum of the squared errors from the line.
• B)is generally less accurate than the high-low method.
• C)can be used only if the fixed cost element is larger than the variable cost element.
• D)can be used only if the fixed cost element is smaller than the variable cost element.

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Definitions:

Book Value

A financial metric that calculates the net asset value of a company's assets minus its liabilities, representing the shareholders' equity value in accounting terms.

Depreciation Expense

The portion of a fixed asset's cost allocated to expense across its useful life, reflecting the asset's consumption or decline in value.

Straight-Line

An approach where the expense of an asset is uniformly allocated across its lifespan to calculate depreciation.

Double-Declining-Balance

A depreciation technique that increases the standard rate of depreciation twofold, thus diminishing an asset's value at a faster pace.