Refer to Toronto Company. What is the cost formula for electricity cost when using the results of regression?
A) $9.75 × machine hours
B) $9.75 + ($2,225 × machine hours)
C) $2,225 × machine hours
D) $2,225 + ($9.75 × machine hours)

Question

Quizplus · Accepted Answer

The cost formula for electricity cost when using the results of regression is given by the equation y = a + bx, where y is the electricity cost, x is the machine hours, a is the fixed cost per period (the intercept), and b is the variable cost per unit (the slope). From the answer choices, the only equation that matches this format is D, where the fixed cost per period is $2,225 and the variable cost per unit is $9.75. Therefore, D is the best choice for the cost formula of electricity cost.