Johnson Company has provided the following data for the first five months of the year:
$\begin{array} {|l | r | r | }
\hline & \text { Machine Hours } & \text { Lubrication Cost } \
\hline \text { January } & 120 & \$ 750 \
\hline \text { February } & 160 & 800 \
\hline \text { March } & 200 & 870 \
\hline \text { April } & 150 & 790 \
\hline \text { May } & 170 & 840 \
\hline
\end{array}$

-Using the least squares regression method,the estimated monthly fixed component of lubrication cost is closest to which of the following?
A) $561.
B) $565.
C) $570.
D) $585.

Question

Johnson Company has provided the following data for the first five months of the year:
$\begin{array} {|l | r | r | } 
\hline & \text { Machine Hours } & \text { Lubrication Cost } \
\hline \text { January } & 120 & \$ 750 \
\hline \text { February } & 160 & 800 \
\hline \text { March } & 200 & 870 \
\hline \text { April } & 150 & 790 \
\hline \text { May } & 170 & 840 \
\hline
\end{array}$

-Using the least squares regression method,the estimated monthly fixed component of lubrication cost is closest to which of the following?
A) $561.
B) $565.
C) $570.
D) $585.

Quizplus · Accepted Answer

The least squares regression method is used to estimate the fixed and variable components of a cost. The fixed component represents the y-intercept in the regression equation $y = mx + b$, where $b$ is the fixed cost. Using the given data to perform a regression analysis, the estimated monthly fixed component of the lubrication cost (the y-intercept) is closest to $561.

Johnson Company Has Provided the Following Data for the First