BusyBee Cleaning Co. is evaluating its costs to clean a standard office. The controller has done a linear regression of the hours spent cleaning various offices and the total costs (labor, supplies, transportation) for each office cleaned. The regression analysis yielded the following information.
Y = $25x + $75
Y = the total cost to clean an office
X = the hours spent cleaning an office
What is the best description of the costs of cleaning an office based on this regression analysis?
A) The cost is $100 per hour to clean an office.
B) There is $25 of fixed costs and $75 of variable costs per hour to clean an office.
C) There is $25 of variable costs per hour and $75 of fixed costs to clean an office.
D) The cost is $25 per hour to clean an office.

Question

Quizplus · Accepted Answer

The equation Y = $25x + $75 shows that for every hour spent cleaning (x), the cost increases by $25, indicating this is the variable cost per hour. The $75 is added regardless of the hours spent, indicating it is a fixed cost.