Which characteristic is true of the high-low method,the scattergraph method,and regression analysis?
A) All methods will produce the same estimate of variable and fixed costs.
B) All methods use historic data to estimate variable and fixed costs.
C) All methods use only two data points in analyzing a mixed cost.
D) None of these are correct.

Question

Quizplus · Accepted Answer

All three methods use historic data to estimate variable and fixed costs. However, the high-low method and scattergraph method only use two data points, while regression analysis uses multiple data points to create a more accurate estimate of the relationship between cost and activity. The three methods may not produce the same estimates of variable and fixed costs.

Which Characteristic Is True of the High-Low Method,the Scattergraph Method,and