When Analyzing a Mixed Cost, You Should Always Plot the Data

question 11

True/False

When analyzing a mixed cost, you should always plot the data in a scattergraph, but it is particularly important to check the data visually on a scattergraph when the R² from a least squares regression is low. A quick look at the scattergraph can reveal that there is little relation between the cost and the activity or that the relation is something other than a simple straight line.

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Definitions:

Materials

Items or substances used in the production or manufacturing of goods.

Personnel Expenses

Costs associated with employing personnel, including wages, benefits, training, and other related expenses.

Spending Variance

A metric that compares the actual cost of production against the budgeted or standard cost, highlighting over or under spending.

Materials

The physical commodities used in the production of goods, ranging from raw materials to fully fabricated components.