The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance for the Regina Company. The following computer output was received:
The driver used was the number of machine hours.
$\begin{array}{lr}
\text { Intercept } & 32,000 \
\text { Slope } & 25
\end{array}$
-Refer to the Figure.What was the cost formula for equipment maintenance?
A)total maintenance cost = $25 × machine hours
B)total maintenance cost = $32,000
C)total maintenance cost = $32,000 + ($25 × machine hours)
D)total maintenance cost = $25 + ($32,000 × machine hours)

Question

The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance for the Regina Company. The following computer output was received:
The driver used was the number of machine hours.
 $\begin{array}{lr}
\text { Intercept } & 32,000 \
\text { Slope } & 25
\end{array}$
-Refer to the Figure.What was the cost formula for equipment maintenance?
A)total maintenance cost = $25 × machine hours
B)total maintenance cost = $32,000
C)total maintenance cost = $32,000 + ($25 × machine hours)
D)total maintenance cost = $25 + ($32,000 × machine hours)

Quizplus · Accepted Answer

The cost formula for equipment maintenance is given by the intercept plus the slope times the number of machine hours, which is $total maintenance cost = \$32,000 + (\$25 \times machine hours)$.

The Method of Least Squares Was Used to Develop a Cost