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 limitation of using the scattergraph method is that the choice of the line used to estimate the cost components is subjective. This means that different individuals might choose different lines, resulting in different estimates of cost components. This subjectivity introduces a risk of error in the estimation process. Therefore, while the scattergraph method can provide useful insights into cost behavior, it should be used cautiously when making cost estimates.

A Limitation of Using the Scattergraph Method to Estimate the Cost