Figure 3-8. Martin Company makes cell phones.The company controller wanted to calculate the fixed and variable costs associated with electricity use in the factory.Data for the past four months were collected.
Coefficients shown by a regression program are:
Refer to Figure 3-8.Using the results of regression,what would be the total budgeted cost for electricity next month assuming that 615 machine hours are budgeted?
A)$2,225
B)$8,240
C)$8,085
D)$4,015

Question

Figure 3-8. Martin Company makes cell phones.The company controller wanted to calculate the fixed and variable costs associated with electricity use in the factory.Data for the past four months were collected.
 Coefficients shown by a regression program are:
 Refer to Figure 3-8.Using the results of regression,what would be the total budgeted cost for electricity next month assuming that 615 machine hours are budgeted?
A)$2,225 
B)$8,240 
C)$8,085 
D)$4,015

Quizplus · Accepted Answer

From the regression program, we have the equation:
Total Cost = $2,585 + ($9.25 × Machine Hours)
Substitute 615 for Machine Hours:
Total Cost = $2,585 + ($9.25 × 615)
Total Cost = $8,085
Therefore, the total budgeted cost for electricity next month assuming that 615 machine hours are budgeted is $8,085.