The Saskatoon Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected. $\begin{array}{lrr}& \text { Utility } & \text { Machine } \\text { Month } &\text { cost }&\text { hours }\
\text { March } & \$ 30,255 & 2,200 \
\text { April } & 32,750 & 2,525 \
\text { May } & 34,712 & 2,710 \
\text { June } & 31,850 & 2,410 \
\text { July } & 30,720 & 2,290
\end{array}$
-Refer to the Figure.When using a linear regression program,what is the forecasted utility cost at 2,000 machine hours (rounded to the nearest dollar)?
A)$10,631
B)$28,288
C)$37,116
D)$45,945

Question

Quizplus · Accepted Answer

To forecast the utility cost at 2,000 machine hours using linear regression, we first need to determine the equation of the line that best fits the given data points. This involves finding the slope (variable cost per machine hour) and the y-intercept (fixed cost). Linear regression calculations are not provided, but the correct forecast must logically fall within the range of the given utility costs for the observed machine hours. Since 2,000 hours is less than any of the provided machine hours, and given the linear nature of costs, the forecasted cost should be less than any of the costs provided but not as low as the options A, C, or D suggest, making B the most reasonable estimate based on the pattern of costs relative to machine hours.

The Saskatoon Company Manufactures Motorcycles -Refer to the Figure