Which of the following is true about the visual fit method?
A)The visual fit method is the most objective way to fit a line to cost data using a scattergraph.
B)Although a scattergraph can be created by hand,the visual fit method of determining total fixed costs and variable costs per unit must be completed by computer.
C)Assuming the relationship between total cost and activity is (mostly)linear the visual fit method is an approximation of total fixed costs and variable costs per unit.
D)If the scattergraph shows there is not a linear relationship between total costs and activity,the visual fit method can give a close approximation of total fixed costs and variable costs per unit.

Question

Quizplus · Accepted Answer

The visual fit method is an approximation of total fixed costs and variable costs per unit assuming a mainly linear relationship between total cost and activity. A and B are incorrect as the visual fit method is a subjective method that does not require a computer. D is also incorrect as if there is not a linear relationship between total costs and activity, the visual fit method would not give a good approximation.

Which of the Following Is True About the Visual Fit