The plant manager requested information to assist in estimating maintenance costs.The following computer printout was generated using the least-squares method:
$\begin{array}{|l|r|}
\hline \text { Intercept } & 2,550 \
\hline \text { Slope } & 1.85 \
\hline \text { Correlation coefficient } & 0.84 \
\hline \text { Activity variable } & \text { Units of production volume } \
\hline
\end{array}$
a.Using the information from the computer printout,develop a cost function that can be used to estimate maintenance costs at different volume levels.
b.Estimate maintenance costs if expected production for next month is 10,000 units.

Question

The plant manager requested information to assist in estimating maintenance costs.The following computer printout was generated using the least-squares method:
 $\begin{array}{|l|r|}
\hline \text { Intercept } & 2,550 \
\hline \text { Slope } & 1.85 \
\hline \text { Correlation coefficient } & 0.84 \
\hline \text { Activity variable } & \text { Units of production volume } \
\hline
\end{array}$ 
a.Using the information from the computer printout,develop a cost function that can be used to estimate maintenance costs at different volume levels.
b.Estimate maintenance costs if expected production for next month is 10,000 units.

Quizplus · Accepted Answer

The Answer of The plant manager requested information to assist in estimating maintenance costs.The following computer printout was generated using the least-squares method:
 $\begin{array}{|l|r|}
\hline \text { Intercept } & 2,550 \
\hline \text { Slope } & 1.85 \
\hline \text { Correlation coefficient } & 0.84 \
\hline \text { Activity variable } & \text { Units of production volume } \
\hline
\end{array}$ 
a.Using the information from the computer printout,develop a cost function that can be used to estimate maintenance costs at different volume levels.
b.Estimate maintenance costs if expected production for next month is 10,000 units.

The Plant Manager Requested Information to Assist in Estimating Maintenance