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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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An advantage of the scattergraph method is that it

  1. a. is objective.
  2. b. is easier to use than the high-low method.
  3. c. is the most accurate method.
  4. d. removes outliers.
  5. e. is descriptive

To determine

Identify an advantage of scattergraph.

Explanation

Scattergraph Method:

In scattergraph method, data points are plotted on the graph to visualize the relationship between total cost and output measure. In this method, total mixed cost at different output levels are shown by using graphs. Two points, which shows the relationship between cost and output are selected and joined.

e.

One of the important advantages of scattergraph is that it is descriptive. It considers all the points, and not just high and low points, thereby establishing the best relationship between cost and activity. Therefore, e is the correct option.

a.

Scattergraph lacks objectivity and is one of the disadvantages of this method...

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