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, what would be the budgeted cost for maintenance next month assuming that 340 machine hours are budgeted?
A) $4,230
B) $3,928
C) $1,150
D) $2,943

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, what would be the budgeted cost for maintenance next month assuming that 340 machine hours are budgeted?
A) $4,230 
B) $3,928 
C) $1,150 
D) $2,943

Quizplus · Accepted Answer

The budgeted cost for maintenance next month is $4,230. This is calculated by using the results of regression to find the equation of the line that best fits the data. The equation of the line is y = 12.43x + 1150.3, where y is the budgeted cost for maintenance and x is the number of machine hours. Plugging in 340 for x, we get y = 4230.