A limitation of using the scattergraph method to estimate the cost components of total cost is:
A)The scattergraph method is complex and costly to use.
B)The scattergraph method requires the use of statistical software.
C)The scattergraph method is not an accepted method for many companies.
D)The choice of the line used to estimate the cost components is subjective.

Question

Quizplus · Accepted Answer

The scattergraph method involves plotting data points and drawing a line of best fit to estimate the cost components of total cost. However, the choice of the line used to estimate the cost components is subjective and can be influenced by personal bias or interpretation. Therefore, the scattergraph method is limited by the subjectivity of choosing the line, making it less accurate than other cost estimation methods.

A Limitation of Using the Scattergraph Method to Estimate the Cost