VISUAL-FIT METHOD Definition

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VISUAL-FIT METHOD is a cost estimation method where an analyst examines a cost by plotting points on a graph (called a scatter diagram) and places a line through the points to yield a cost function. This method is more objective than the account-classification method, but it is still lacking because two cost analysts could (and likely would) visually fit different lines. Such an approach is useful, though, because it helps spot non-representative data points, or outliers.

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NORMALIZED EARNINGS is earnings that have been adjusted in order to take into account the effect of cycles in the economy.

SALES DISCOUNT is a reduction in the selling price usually as an inducement to consummate a sale. Sales Discount is on the income statement as a deduction from Gross Sales to get Net Sales.

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