Mr. Robinson, the director of Medical Diagnostics Clinic, is preparing a presentation to the clinic’s board of directors about the fee charged for thallium stress tests. Part of the presentation will include information about the variable cost element and fixed costs associated with the tests. The accounting department has provided the director with a report which details the monthly costs associated with the thallium stress tests and the number of tests performed each month. Mr. Robinson is contemplating whether to use the scatter graph method, the high-low method, or regression analysis to separate the cost into its variable cost element and fixed cost. The director has asked your help in choosing an appropriate method.

Required: Prepare a short report to Mr. Robinson providing insight into the strengths and weaknesses of the scatter graph method, the high-low method, and regression analysis.