Burmer Co.has accumulated data to use in preparing its annual profit plan for the upcoming year.The cost behavior pattern of the maintenance costs must be determined.Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows:
A staff assistant has run regression analyses on the data and obtained the following output using Excel:
Using regression analysis,what is the estimated maintenance expense for a month that the firm expects to operate 600 machine hours (using 3 decimal places in calculations)?
A)$88.
B)$4,050.
C)$4,850.
D)$6,934. $783.778 + ($6.777 x 600)= $4,850

Question

Burmer Co.has accumulated data to use in preparing its annual profit plan for the upcoming year.The cost behavior pattern of the maintenance costs must be determined.Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows: 
A staff assistant has run regression analyses on the data and obtained the following output using Excel: 
Using regression analysis,what is the estimated maintenance expense for a month that the firm expects to operate 600 machine hours (using 3 decimal places in calculations)?
A)$88. 
B)$4,050. 
C)$4,850. 
D)$6,934. $783.778 + ($6.777 x 600)= $4,850

Quizplus · Accepted Answer

The estimated maintenance expense for a month that the firm expects to operate 600 machine hours is calculated using the regression equation: 
Estimated Maintenance expense = $783.778 + ($6.777 × 600) = $4,849.978, which rounds up to $4,850. Therefore, the best choice is C.

Burmer CoHas Accumulated Data to Use in Preparing Its Annual Profit