Which of the following approaches for estimating fixed and variable costs using historical information fits a straight line to a set of data points?
A)Scattergraph method and regression analysis
B)Scattergraph method and account analysis
C)High-low method and account analysis
D)Scattergraph method and high-low method
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The scattergraph method and regression analysis involve graphing historical data points and fitting a straight line to the data to estimate both fixed and variable costs. The other options either use only two data points (high-low method) or rely on subjective judgment (account analysis), which may lead to inaccurate estimates.

Which of the Following Approaches for Estimating Fixed and Variable