Figure 3-14. Blacken Company manufactures motorcycles.The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory.Data for the past five months were collected.
Refer to Figure 3-14.Using a regression program,the yearly utility cost equation (with all variables to the nearest penny)is

Question

Figure 3-14. Blacken Company manufactures motorcycles.The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory.Data for the past five months were collected.
 Refer to Figure 3-14.Using a regression program,the yearly utility cost equation (with all variables to the nearest penny)is

Quizplus · Accepted Answer

The regression equation presented in option B represents the best choice. This equation includes a constant term ($10,630.80) and a variable term ($8.83 ´ machine hours) to determine the total utility cost. The constant represents the fixed cost component, and the variable term represents the cost per unit of the variable input (machine hours). This equation can be used to estimate the total utility cost based on the number of machine hours used.