1. a. Which of the following statements is true regarding regression analysis?

1. Regression analysis considers all of the data points for determining the line that best fits the data so it is usually less accurate than the high-low method.
2. Regression analysis helps generate a statistic, called the R-square, which tells how well the line fits the data points.
3. Regression analysis can only be used by manufacturing companies to predict costs.
4. All of the above are true.

1.b. Which of the following is NOT true regarding an income statement organized according to the contribution margin approach? A. The contribution margin income statement is organized by cost behavior. B. Operating income will always be the same as operating income in a traditional income statement regardless of changes in inventory levels. C. All fixed costs, including fixed MOH, are expensed below the contribution margin line. D. The contribution margin is equal to sales revenue minus variable expenses.