What is characteristic of the scatterplot method of cost estimation?
A)The scatterplot method is influenced by extreme observations.
B)The scatterplot method requires the use of judgment.
C)The scatterplot method uses the least-squares method.
D)The scatterplot method is superior to other methods in its ability to distinguish between discretionary and committed fixed costs.

Question

Quizplus · Accepted Answer

The scatterplot method requires the use of judgment as it involves plotting historical cost and activity data on a graph to visually identify any relationship between the two variables. It is not influenced by extreme observations, does not necessarily use the least-squares method, and is not superior to other methods in distinguishing between discretionary and committed fixed costs.

What Is Characteristic of the Scatterplot Method of Cost Estimation