Figure 3-3. Okafor Company manufactures skis.The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery.Data for the past four months were collected.
Refer to Figure 3-3.What would the estimate of Okafor Company's total lease cost be at a level of 500 machine hours?
A)$19,606
B)$19,556
C)$16,464
D)$18,546

Question

Figure 3-3. Okafor Company manufactures skis.The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery.Data for the past four months were collected.
 Refer to Figure 3-3.What would the estimate of Okafor Company's total lease cost be at a level of 500 machine hours?
A)$19,606 
B)$19,556 
C)$16,464 
D)$18,546

Quizplus · Accepted Answer

According to the regression equation, the estimated total lease cost at 500 machine hours would be:
Y = 15,720 + 0.06(500) = 18,720
Adding the estimated fixed cost of $836, the total estimated lease cost is:
18,720 + 836 = $19,556. Therefore, the best choice is B.