ABC produces one product. The following data shows the number of units of product made in the first few months of last year and the total costs incurred during the month: Month Units Total Costs January 750 $ 60,000 February 580 $ 49,000 March 4500 $ 45,000 April 710 $ 64,000 Which of the three quantitative methods mentioned in Chapter 6 (a scattergraph; high-low method; linear regression) is likely to yield the most accurate estimate of the breakdown between variable and fixed costs for this data set? (Briefly explain why.)
ABC produces one product. The following data shows the number of units of product made in the first few months of last year and the total costs incurred during the month: Month Units Total Costs January 750 $ 60,000 February 580 $ 49,000 March 4500 $ 45,000 April 710 $ 64,000 Which of the three quantitative methods mentioned in Chapter 6 (a scattergraph; high-low method; linear regression) is likely to yield the most accurate estimate of the breakdown between variable and fixed costs for this data set? (Briefly explain why.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ABC produces one product. The following data shows the number of units of product
made in the first few months of last year and the total costs incurred during the
month:
Month
Units
Total Costs
January
750
$
60,000
February
580
$ 49,000
March
4500
$
45,000
April
710
$
64,000
Which of the three quantitative methods mentioned in Chapter 6 (a scattergraph;
high-low method; linear regression) is likely to yield the most accurate estimate of
the breakdown between variable and fixed costs for this data set? (Briefly explain
why.)
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