1. Describe the cost formula for a strictly variable cost such as electrical power cost of $1.15 per machine hour (i.e., every hour the machinery is run, electrical power cost goes up by $1.15).
3. What is the scattergraph method, and why is it used? Why is a scattergraph a good first step in separating mixed costs into their fixed and variable components?
3. Describe how the scattergraph method breaks out the fixed and variable costs from a mixed cost. Now describe how the high-low method works. How do the two methods differ?
4. What are the advantages of the scattergraph method over the high-low method? The high-low method over the scattergraph method?
5. Describe the method of least squares. Why is this method better than either the high-low method or the scattergraph method?
6. What is meant by the best-fitting line?
7. Explain the meaning of the coefficient of determination.