Regis Corporation wants to know how closely its current cost driver is correlated with its monthly operating costs. The managerial accountant runs a regression analysis using a statistical software program and produces the following data: Intercept Coefficient = 12,200,567
X Variable 1 Coefficient = 95.65
R-square = 0.8574
What is the Regis Corporation's monthly cost equation?
A)y = $95.65x + $8,574
B)y = $95.65x + $12,200,567
C)y = $12,200,567x + $8,574
D)y = $0.8574x + $12,200,567

Question

Quizplus · Accepted Answer

The monthly cost equation is in the form of y = mx + b, where y represents the monthly operating costs and x represents the cost driver. From the regression analysis, we know that the intercept coefficient (b) is $12,200,567 and the X Variable 1 coefficient (m) is $95.65. Therefore, the equation is: y = $95.65x + $12,200,567.

Regis Corporation Wants to Know How Closely Its Current Cost