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 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.

Question

Quizplus · Accepted Answer

The advantage of using scatterplot method over the high-low method is that a cost analyst can review the data visually and eliminate outliers. This approach is more precise in determining the relationship between the cost and the activity level. The high-low method, on the other hand, relies on just two points of data, which makes it less reliable. The scatterplot method allows for a statistical method to determine the "best fit" and promote objective judgment of the analyst.

Which of the Following Is an Advantage of Using the Scatterplot