Scatter Diagram: Scatter diagram is the graphical representation of the two different components and reflects the comparison between both the components. Fixed Cost: Fixed cost refers the cost which remains constant for particular time duration and there is no effect on it of the level of production. Variable Cost: Variable cost refers the cost which varies due to the change in the level of production. Higher production level refers higher the variable cost, and lower production level refers lower the variable cost. To describe: The usefulness of scatter diagram to identify and measure the cost behavior.

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Chapter 5, Problem 13DQ

To determine

Scatter Diagram:

Scatter diagram is the graphical representation of the two different components and reflects the comparison between both the components.

Fixed Cost:

Fixed cost refers the cost which remains constant for particular time duration and there is no effect on it of the level of production.

Variable Cost:

Variable cost refers the cost which varies due to the change in the level of production. Higher production level refers higher the variable cost, and lower production level refers lower the variable cost.

To describe: The usefulness of scatter diagram to identify and measure the cost behavior.

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