Briefly explain the use of statistical methods to separate mixed cost components
The relationship between costs and activities is mathematically described with the help of statistical methods. Statistical methods, such as regression analysis, are used to separate mixed costs into variable and fixed components. Because all data observations are used, the resulting linear equation is more representative of cost behavior than either the high-low or scatter diagram methods. Regression analysis can be performed using one or more activities to predict costs.
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Answer the following statement true (T) or false (F)
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