Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver. The output of regression analysis showed the following information: Intercept Coefficient = 89,500
X Variable 1 Coefficient = 62.50
R-square = 0.9855
What is the company's monthly cost equation?
A)y = $98.55x + $89,500
B)y = $62.50x + $89,500
C)y = $89,500x + $62.98
D)y = $89,500x + $98.55

Question

Quizplus · Accepted Answer

The monthly cost equation is given by y = a + bx, where a is the intercept coefficient and b is the coefficient of the cost driver variable (X Variable 1). Therefore, based on the information given, the monthly cost equation is y = $62.50x + $89,500.

Your Client's Company Wants to Determine the Relationship Between Its