The scatterplot method of cost estimation
A)is influenced by extreme observations.
B)requires the use of judgment.
C)uses the least-squares method.
D)is superior to other methods in its ability to distinguish between discretionary and committed fixed costs.

Question

Quizplus · Accepted Answer

The scatterplot method is a visual method of cost estimation that requires the use of judgment to draw a line of best fit through data points. It is influenced by extreme observations, and it does not use the least-squares method. While it can be useful in estimating costs, it is not superior to other methods in its ability to distinguish between discretionary and committed fixed costs. Choice A is incorrect because extreme observations can skew the results. Choice C is incorrect because the scatterplot method does not use the least-squares method. Choice D is incorrect because the scatterplot method is not superior to other methods in distinguishing between discretionary and committed fixed costs.

The Scatterplot Method of Cost Estimation