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 variable rate of maintenance cost.
A) $1,150 per machine hour
B) $12.74 per machine hour
C) $9.06 per machine hour
D) $12.14 per machine hour

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 variable rate of maintenance cost.
A) $1,150 per machine hour 
B) $12.74 per machine hour 
C) $9.06 per machine hour 
D) $12.14 per machine hour

Quizplus · Accepted Answer

The variable rate of maintenance cost is determined by the slope of the regression line, which represents the change in cost per unit change in machine hours. Based on the given options, $9.06 per machine hour is the correct variable rate.