(Appendix 2A)Recent maintenance costs of Gallander Corporation are listed below: Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the least-squares regression method, the estimate of the variable component of maintenance cost per machine-hour is closest to:
A)$1.85
B)$10.30
C)$1.67
D)$1.90

Question

(Appendix 2A)Recent maintenance costs of Gallander Corporation are listed below:  Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the least-squares regression method, the estimate of the variable component of maintenance cost per machine-hour is closest to:
A)$1.85 
B)$10.30 
C)$1.67 
D)$1.90

Quizplus · Accepted Answer

Using Microsoft Excel functions, the solution is:
Maintenance cost per machine-hour = Slope = $1.67

(Appendix 2A)Recent Maintenance Costs of Gallander Corporation Are Listed Below