Chesley Corporation,which uses least-squares regression analysis,has derived the following regression equation for estimates of manufacturing overhead: Y = 495,000 + 5.65X.Which of the following statements is true if the primary cost driver is machine hours?
A)Total manufacturing overhead is represented by the variable "X."
B)The company anticipates $495,000 of fixed manufacturing overhead.
C)"X" is commonly known as the dependent variable.
D)"X" represents the number of machine hours.
E)Both "B" and "D" are truE.

Question

Quizplus · Accepted Answer

The equation Y = 495,000 + 5.65X indicates that $495,000 is the fixed manufacturing overhead (B), and "X" represents the number of machine hours, which is the primary cost driver (D).

Chesley Corporation,which Uses Least-Squares Regression Analysis,has Derived the Following Regression