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What Is an Advantage of Using the Scattergraph Method Over

Question 69
Multiple Choice

What is an advantage of using the scattergraph method over the high-low method to estimate costs? A) A cost analyst can review the data visually and eliminate outliers. B) It uses statistics to determine a "best fit" line through a set of data points. C) The cost formula can be determined simply by looking at two points of data. D) It provides a superior quality cost formulae because it relies on the objective judgement of the analysts.

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Why is managerial judgment critically important in gathering information about costs? A) It is necessary to understand revenues. B) It is important in determining cost behaviour. C) Costs are enhanced by only by new managers. D) It helps to broaden statistical estimation results.
Q 71
Which statement best describes the high-low method? A) It is the most accurate method. B) It has the disadvantage of objectivity. C) It is mathematically easy to calculate. D) It cannot be affected by the presence of outliers.
Q 72
Which formula calculates the variable rate of a mixed cost when using the high-low method? A) B) C) total cost at high point - (variable rate × output at low point) D) total cost at high point - (variable rate × output at high point)
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