Asked by Emily Esparza on Jun 19, 2024
Verified
There are only two methods to derive an estimated line of cost behavior; the high-low method and the scatter diagram.
Estimated Line of Cost Behavior
A projection or estimation of how costs change in relation to changes in an organization’s level of activity.
High-Low Method
An accounting technique used to estimate variable and fixed costs associated with a business activity by analyzing the highest and lowest levels of activity.
Scatter Diagram
A graphical representation used to show the relationship between two variables, often used in statistics and quality control to identify potential correlations.
- Understand the rationale and procedure for generating scatter plots.
Verified Answer
MS
Melissa SanchezJun 20, 2024
Final Answer :
False
Explanation :
There are actually three methods to derive an estimated line of cost behavior: the high-low method, the scatter diagram, and the least squares regression method.
Learning Objectives
- Understand the rationale and procedure for generating scatter plots.