Figure 3-12. 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:
The driver used was the number of machine hours.
Refer to Figure 3-12.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)none of these are correct

Question

Figure 3-12. 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:
 The driver used was the number of machine hours.
Refer to Figure 3-12.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)none of these are correct

Quizplus · Accepted Answer

Based on the computer output, the cost formula for equipment maintenance is given by the equation: total maintenance cost = $32,000 + ($25 × machine hours). This means there is a fixed cost of $32,000 plus an additional cost of $25 for each machine hour.