Question

The least-squares regression method is: Multiple Choice A graphical method to identify cost behavior. An algebraic method to identify cost behavior. A statistical method to identify cost behavior. The only identify cost estimation method allowed by GAAP. A cost estimation method that only uses the two extreme values.

Answer 1

Answer:

A statistical method to identify cost behavior.

Step-by-step explanation:

Costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.

In Financial accounting, the three methods used to classify costs into their fixed and variable components includes high-low method, scatter diagrams and least-squares regression.

A least squares regression line is a standard technique in regression analysis used to make the vertical distance obtained from the data points running to the regression line to become very minimal or as small as possible.

Hence, the least-squares regression method is a statistical method that is typically used for identifying cost behavior.

Generally, the sum of the residuals of a least squares regression line is always equal to zero.