Assuming that a cost is mixed and linear, and that past cost behavior is expected to continue into the future, which of the following is mostly likely the best technique for estimating future costs?
A) Engineered estimate of cost
B) Two-point method
C) Scatter plot
D) Regression analysis

Question

Quizplus · Accepted Answer

Regression analysis is the most appropriate technique for estimating future costs in this scenario as it involves analyzing past cost behavior and developing a mathematical equation that can be used to predict future costs. This technique takes into account both the fixed and variable components of the mixed cost and provides a more accurate estimation of future costs compared to other methods such as the two-point method or scatter plot. Engineered estimate of cost may be suitable for certain types of costs such as direct material costs, but may not be useful for mixed costs.

Assuming That a Cost Is Mixed and Linear, and That