NOT: 2 min.Figure 3-8.Martin Company makes cell phones. The company controller wanted to calculate the fixed and variable costs associated with electricity use in the factory. Data for the past four months were collected. Coefficients shown by a regression program are:

-Refer to Figure 3-8. Using the results of regression, what would be the total budgeted cost for electricity next month assuming that 615 machine hours are budgeted?
A) $2,225
B) $8,240
C) $8,085
D) $4,015

Question

NOT: 2 min.Figure 3-8.Martin Company makes cell phones. The company controller wanted to calculate the fixed and variable costs associated with electricity use in the factory. Data for the past four months were collected.  Coefficients shown by a regression program are:
 
-Refer to Figure 3-8. Using the results of regression, what would be the total budgeted cost for electricity next month assuming that 615 machine hours are budgeted?
A) $2,225 
B) $8,240 
C) $8,085 
D) $4,015

Quizplus · Accepted Answer

According to the regression results, the fixed cost is $595 and the variable cost is $11.50 per machine hour. To calculate the total budgeted cost, we need to plug in the values for the next month's machine hours: 
Total cost = $595 + ($11.50 x 615) = $8,085. Therefore, the correct answer is C.

NOT: 2 Min