The following computer printout estimated overhead costs using multiple regression:

During the year the company used 1,000 setup hours and 500 parts.
-Refer to the figure.What model is being measured?
A)Overhead = 0.98 + 40.98(Setup hours)+ 4.865(# of parts)
B)Overhead = 510 + 0.305(Setup hours)+ 10.527(# of parts)
C)Overhead = 1,000 + 25(Setup hours)
D)Overhead = 1,000 + 25(Setup hours)+ 100(# of parts)

Question

The following computer printout estimated overhead costs using multiple regression:

During the year the company used 1,000 setup hours and 500 parts.
-Refer to the figure.What model is being measured?
A)Overhead = 0.98 + 40.98(Setup hours)+ 4.865(# of parts) 
B)Overhead = 510 + 0.305(Setup hours)+ 10.527(# of parts) 
C)Overhead = 1,000 + 25(Setup hours) 
D)Overhead = 1,000 + 25(Setup hours)+ 100(# of parts)

Quizplus · Accepted Answer

The model being measured includes a fixed overhead cost, a variable cost based on setup hours, and a variable cost based on the number of parts. Choice D is the only option that includes all three components: a fixed cost (1,000), a cost per setup hour (25), and a cost per part (100).

The Following Computer Printout Estimated Overhead Costs Using Multiple Regression