The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance.The following computer output was received:
What is the independent variable of the cost formula for equipment maintenance?
A) number of machine hours
B) the variable rate
C) the fixed cost
D) the total cost

Question

The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance.The following computer output was received: ​
 What is the independent variable of the cost formula for equipment maintenance?
A) number of machine hours 
B) the variable rate 
C) the fixed cost 
D) the total cost

Quizplus · Accepted Answer

The independent variable of the cost formula is the variable that is expected to have a direct impact on the cost. In this case, the method of least squares was used to predict monthly equipment maintenance cost, and the independent variable is likely to be the number of machine hours, which can be used to estimate the amount of maintenance required. The variable rate and fixed cost are dependent variables that are calculated based on the independent variable. The total cost is not an independent variable but is instead the dependent variable predicted by the cost formula.

The Method of Least Squares Was Used to Develop a Cost