The managerial accountant at the Bookcase Factory prefers regression analysis to the high-low method because it is a more accurate method.The managerial accountant uses regression output and analyzes the following data to predict future costs:
Y =$250x + $625
Where,
Y = total monthly utility cost
X = number of guests
What is the intercept coefficient,or the vertical intercept of the fixed cost line,in the equation listed above?
A)y
B)$250x
C)$625
D)$250x + $625

Question

Quizplus · Accepted Answer

The intercept coefficient represents the fixed cost or the cost that does not vary with the number of guests. In this equation, the intercept coefficient is $625, which means that the fixed cost of monthly utility is $625 regardless of the number of guests. Option C is the correct answer. Option A and B are incorrect because they do not represent the fixed cost, and option D includes both the fixed cost and the variable cost.

The Managerial Accountant at the Bookcase Factory Prefers Regression Analysis