Given actual amounts of a semivariable cost for various levels of output,the method that will always give the most reliable measure of the fixed and variable components is the:
A)high-low method.
B)linear regression method.
C)scattergraph method.
D)account analysis methoD.Linear regression will always give the best line,high-low may give the best line,scattergraph and account analysis rely on judgment.

Question

Quizplus · Accepted Answer

The linear regression method will always provide the most reliable measure of the fixed and variable components of a semivariable cost. This method uses statistical techniques to calculate the equation of the straight line that best fits the data, based on the principle of least squares. It takes into account all the data points and minimizes the distance between the line and the actual data points, providing a more accurate measure of the cost behavior. The high-low method, scattergraph method, and account analysis method all rely on judgment and may not provide as accurate results.

Given Actual Amounts of a Semivariable Cost for Various Levels