Assuming that a cost is mixed and linear, and that past cost behaviour 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 best technique for estimating future costs when past cost behavior is expected to continue into the future because it uses historical data to create a mathematical model that can predict future costs. Other methods, such as engineered estimates and scatter plots, rely on human judgment and may not be as accurate or reliable. The two-point method is only useful if there are only two data points available.

Assuming That a Cost Is Mixed and Linear, and That