Scattergrah Method

The scatter-graph method requires that all recent, normal data observations be plotted on a cost (Y-axis) versus activity (X-axis) graph. A line that most closely represents a straight line composed of all the data points should be drawn. By extending the line to where it intersects the cost axis, a company has a fairly accurate estimate of the fixed costs for the period. The angle (slope) of the line can be calculated to give a fairly accurate estimate of the variable cost per unit. The inclusion of the effect of all data points is a strength of this method, ...