DEFINITION of 'Scattergraph Method'
A visual technique for separating the fixed and variable elements of a semivariable expense (also called a mixed expense) in order to estimate and budget for future costs. A scattergraph is made up of a horizontal x axis that represents production activity, a vertical y axis that represents cost, data that are plotted as points on the graph and a regression line that runs through the dots which represents the relationship between the variables.
BREAKING DOWN 'Scattergraph Method'
Business managers use the scattergraph method in cost estimation to anticipate operating costs at different activity levels. The method gets its name from the overall image of the graph, which consists of many scattered dots. While the method is simple, it is also imprecise. Alternate methods of cost estimation include the highlow method, account analysis and least squares.

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What are the variables in variable costs?
Learn about variable costs. Explore how and why these costs may fluctuate, as well as ways in which they may differ from ... Read Answer >> 
How are semivariable costs similar to fixed costs?
Learn what fixed costs are, what semivariable costs are, why semivariable costs are similar to fixed costs, and how semivariable ... Read Answer >> 
How are fixed costs treated in cost accounting?
Learn how fixed costs and variable costs are used in cost accounting to help a company's management in budgeting and controlling ... Read Answer >> 
Do production costs include all fixed and variable costs?
Learn more about fixed and variable costs and how they affect production costs. Understanding how to graph these costs can ... Read Answer >> 
What variables are most important when making a prediction through sensitivity analysis?
Explore sensitivity analysis and how this method considers different variables to determine a course of action based on statistical ... Read Answer >> 
Is it better for a company to have fixed or variable costs?
Understand the difference between a fixed cost and a variable cost, and learn how a company benefits from having more fixed ... Read Answer >>