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 yearly utility cost equation (with all variables to the nearest penny)?
A)total utility cost = $127,569.60 + ($8.83 × machine hours)
B)total utility cost = $10,630.80 + ($8.83 × machine hours)
C)total utility cost = $8.83 + ($10,630.80 × machine hours)
D)total utility cost = $10,630.80 ? ($8.83 × machine hours)

Question

Quizplus · Accepted Answer

The correct choice is B) total utility cost = $10,630.80 + ($8.83 × machine hours), as this represents a linear equation where $10,630.80 is the fixed cost (intercept) and $8.83 is the variable cost per machine hour (slope), which is typical for a cost equation in linear regression analysis.

The Saskatoon Company Manufactures Motorcycles -Refer to the Figure