Figure 3-8 The following computer printout estimated overhead costs using multiple regression:
During the year the company used 1,000 setup hours and 500 parts.
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Refer to Figure 3-8.What is the predicted overhead cost?
A) $2,500
B) $75,000
C) $76,000
D) none of these

Question

Figure 3-8 The following computer printout estimated overhead costs using multiple regression:
 During the year the company used 1,000 setup hours and 500 parts.
-
Refer to Figure 3-8.What is the predicted overhead cost?
A) $2,500 
B) $75,000 
C) $76,000 
D) none of these

Quizplus · Accepted Answer

From the printout, the equation for overhead cost is: 
Overhead cost = $20,000 + ($5 × setup hours) + ($150 × parts)
Substituting the values given in the question:
Overhead cost = $20,000 + ($5 × 1,000) + ($150 × 500) 
Overhead cost = $20,000 + $5,000 + $75,000 = $100,000
Therefore, the predicted overhead cost is $76,000 (Option C).

Figure 3-8 the Following Computer Printout Estimated Overhead Costs Using