Figure 3-12.The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance. The following computer output was received:
The driver used was the number of machine hours.
-Refer to Figure 3-12. What was the cost formula for equipment maintenance?
A) total maintenance cost = $25 * machine hours
B) total maintenance cost = $32,000
C) total maintenance cost = $32,000 + ($25 * machine hours)
D) None of these are correct.

Question

Figure 3-12.The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance. The following computer output was received:
  The driver used was the number of machine hours.
-Refer to Figure 3-12. What was the cost formula for equipment maintenance?
A) total maintenance cost = $25 * machine hours 
B) total maintenance cost = $32,000 
C) total maintenance cost = $32,000 + ($25 * machine hours) 
D) None of these are correct.

Quizplus · Accepted Answer

The computer output shows that the cost equation includes a constant term of $32,000 and a coefficient of $25 per machine hour. Therefore, the correct formula for equipment maintenance cost is C = $32,000 + ($25 x machine hours).