Prince Edward Company produces hand-held calculators. The company controller wanted to calculate the fixed and variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were collected.Coefficients shown by a regression program are as follows:
$\begin{array}{lrr}& \text { Maintenance } & \text { Machine } \
\text { Month } & \text { cost } & \text { hours }\
\text { March } & \$ 4,180 & 328 \
\text { April } & 3,956 & 310 \
\text { May } & 4,686 & 386 \
\text { June } & 4,240 & 352
\end{array}$ $$\begin{array} { l l }
\text { Intercept } & 985 \
\text { X Variable 1 } & 9.82
\end{array}$$
-Refer to the Figure.What is the cost formula for maintenance cost when using the result of regression?
A)$985 × machine hours
B)($4,686 ? $3,956)/(386 ? 310)
C)$9.82 × machine hours
D)$985 + ($9.82 × machine hours)

Question

Prince Edward Company produces hand-held calculators. The company controller wanted to calculate the fixed and variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were collected.Coefficients shown by a regression program are as follows:
 $\begin{array}{lrr}& \text { Maintenance } & \text { Machine } \
\text { Month } & \text { cost } & \text { hours }\
\text { March } & \$ 4,180 & 328 \
\text { April } & 3,956 & 310 \
\text { May } & 4,686 & 386 \
\text { June } & 4,240 & 352
\end{array}$ $$\begin{array} { l l } 
\text { Intercept } & 985 \
\text { X Variable 1 } & 9.82
\end{array}$$
-Refer to the Figure.What is the cost formula for maintenance cost when using the result of regression?
A)$985 × machine hours
B)($4,686 ? $3,956)/(386 ? 310)
C)$9.82 × machine hours
D)$985 + ($9.82 × machine hours)

Quizplus · Accepted Answer

The cost formula for maintenance cost using the regression results is the fixed cost (intercept) plus the variable cost per unit (slope) times the number of units (machine hours). The intercept is $985, representing the fixed cost, and the slope is $9.82, representing the variable cost per machine hour. Therefore, the correct formula is $985 + ($9.82 × machine hours).

Prince Edward Company Produces Hand-Held Calculators Intercept 985 X Variable 1 9.82\begin{array} { l l } \text { Intercept } & 985 \\\text { X Variable 1 } & 9.82\end{array} Intercept X Variable 1 ​9859.82​

Prince Edward Company Produces Hand-Held Calculators $\begin{array} { l l } \text { Intercept } & 985 \\\text { X Variable 1 } & 9.82\end{array}$