Given actual amounts of a semi-variable cost for various levels of output,the method that will always give the most reliable measure of the fixed and variable components is the:
A) high-low method.
B) linear regression method.
C) scattergraph method.
D) account analysis methoD.
Linear regression will always give the most reliable measure of the fixed and variable components for various levels of output;high-low may give the best line but scattergraph and account analysis rely on judgment.

Question

Quizplus · Accepted Answer

Linear regression will always give the most reliable measure of the fixed and variable components for various levels of output, as it uses a statistical method to estimate the relationship between the cost and activity levels. The high-low method uses only the highest and lowest activity levels, which may not be representative, and the scattergraph and account analysis methods rely on judgment, which can be subjective and less accurate.

Given Actual Amounts of a Semi-Variable Cost for Various Levels