In determining cost behavior in business, the cost function is often expressed as Y = a + bX. Which one of the following cost estimation methods should not be used in estimating fixed and variable costs for the equation? (CMA adapted)
A) Scattergraph method.
B) Simple regression.
C) High and low point method.
D) Management analysis of data.

Question

Quizplus · Accepted Answer

Management analysis of data is subjective and lacks the quantitative rigor of the other methods, making it less reliable for estimating fixed and variable costs.

In Determining Cost Behavior in Business, the Cost Function Is