Which of the Following Is an Advantage of Using the Scatterplot

question 166

Multiple Choice

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

• A)It is a statistical method to determine the "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 analyst.
• D)The cost formula can be determined simply by looking at two points of data.

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Definitions:

Activity Cost Pools

A method in cost accounting used to group all related costs associated with specific activities.

Activity-Based Costing

A pricing method that allocates expenses to goods or services according to the resources they use.

Machine-Hours

A measure of production time, indicating the total hours that machines are operational within a set period.

Overhead Cost

Expenses related to the day-to-day operations of a business that aren't directly tied to the production of goods or services.