Which of the following is a strength of the regression method of cost estimation?
A)The method provides a detailed expert analysis of the cost behavior in each account.
B)The method is based on studies of what future costs should be rather than what past costs have been.
C)The method requires that several relatively strict assumptions be satisfied.
D)The method is relatively easy to use with computer and sophisticated calculators.

Question

Quizplus · Accepted Answer

Regression analysis is a powerful tool for cost estimation because it is relatively easy to use with computer and sophisticated calculators. This method uses historical data to estimate future costs, which makes it more reliable than methods that rely solely on expert analysis or studies of what costs should be. However, it does require several assumptions to be met, such as linearity and homoscedasticity, which can limit its applicability in certain situations. Overall, the ease of use and reliable results make regression a popular choice for cost estimation.

Which of the Following Is a Strength of the Regression