(Appendix 2A)Recent maintenance costs of Gallander Corporation are listed below: Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the least-squares regression method, the estimate of the fixed component of maintenance cost per month is closest to:
A)$6, 066
B)$7, 244
C)$5, 944
D)$7, 130

Question

(Appendix 2A)Recent maintenance costs of Gallander Corporation are listed below:  Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the least-squares regression method, the estimate of the fixed component of maintenance cost per month is closest to:
A)$6, 066 
B)$7, 244 
C)$5, 944 
D)$7, 130

Quizplus · Accepted Answer

Using Microsoft Excel functions, the solution is:
Fixed maintenance cost per month = Intercept = $6, 066

(Appendix 2A)Recent Maintenance Costs of Gallander Corporation Are Listed Below