LEAST-SQUARED METHOD Definition

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LEAST-SQUARED METHOD of approximating cost is a statistical approach that is both objective and considers all the data points. By using mathematical formulas to arrive at the best possible cost line (i.e., the regression line), it is more accurate than the methods mentioned previously. The regression line is in the form Y=a + bX, where X is the independent variable and Y is the dependent variable. The coefficient of determination (R2) can be used to judge the line's goodness of fit.

Learn new Accounting Terms

AAA is American Accounting Association, Association of Accounting Administrators, or see ACCUMULATED ADJUSTMENT ACCOUNT.

COE see COST OF EQUITY.

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