The first step in regression analysis is to plot the cost data against each potential cost driver because the plots may show ________.
A) nonlinear trends in the data only
B) outliers only
C) nonlinear trends in the data and outliers
D) missing cost data

Question

Quizplus · Accepted Answer

Plotting the cost data against each potential cost driver may show both nonlinear trends in the data (which can be corrected by using nonlinear regression methods) and outliers (which may need to be excluded from the analysis). It is important to address both of these issues in regression analysis to ensure accurate results. Missing cost data would not be detected by plotting the data against cost drivers.

The First Step in Regression Analysis Is to Plot the Cost