Figure 3-7.Margola Company produces hand-held calculators. The company controller wanted to calculate the fixed and variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were collected. Coefficients shown by a regression program are:

-Refer to Figure 3-7. Using the results of regression, calculate the fixed cost of maintenance.
A) $1,150.00
B) $978.37
C) $9.06
D) None of these are correct.

Question

Figure 3-7.Margola Company produces hand-held calculators. The company controller wanted to calculate the fixed and variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were collected.  Coefficients shown by a regression program are:
 
-Refer to Figure 3-7. Using the results of regression, calculate the fixed cost of maintenance.
A) $1,150.00 
B) $978.37 
C) $9.06 
D) None of these are correct.

Quizplus · Accepted Answer

The fixed cost can be found by looking at the intercept of the regression line. In this case, the intercept is 1,150. Therefore, the fixed cost of maintenance is $1,150.