Which of the following is an advantage of using the scatter-graph method over the high-low method to estimate costs?
A) It is a statistical method to determine "best fit".
B) A cost analyst can review the data visually and eliminate outliers.
C) The quality of the cost formula relies on the objective judgment of the analysts.
D) The cost formula can be determined simply by looking at two points of data.

Question

Quizplus · Accepted Answer

The advantage of using the scatter-graph method over the high-low method is that a cost analyst can review the data visually and eliminate outliers. This helps in obtaining a more accurate cost formula. Option A is incorrect as both methods are statistical methods to determine best fit. Option C is incorrect as objective judgment is required for both methods. Option D is incorrect as the cost formula determined by the high-low method is not always accurate as it is based on only two points of data.

Which of the Following Is an Advantage of Using the Scatter-Graph