Figure 3-6 The following information is available for maintenance costs:

-Refer to Figure 3-6.Using a computer or calculator, compute the estimate of variable cost per unit of production using the method of least squares.Rounded to two decimal places, this value would be
A) $3.21.
B) $2.70.
C) $1.31.
D) $1.23.

Question

Figure 3-6 The following information is available for maintenance costs:
 
-Refer to Figure 3-6.Using a computer or calculator, compute the estimate of variable cost per unit of production using the method of least squares.Rounded to two decimal places, this value would be
A) $3.21. 
B) $2.70. 
C) $1.31. 
D) $1.23.

Quizplus · Accepted Answer

The method of least squares is a statistical technique used to determine the line of best fit by minimizing the sum of the squares of the vertical deviations from each data point to the line. In this context, it is used to estimate the variable cost per unit. The calculation involves using the given data points to find the slope of the line, which represents the variable cost per unit. The correct calculation results in a variable cost of $1.31 per unit.

Figure 3-6 the Following Information Is Available for Maintenance Costs