Figure 3-14.Blacken Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected.
-Refer to Figure 3-14. Using a regression program, the forecasted utility cost at 2,550 machine hours (rounded to the nearest dollar) is

Question

Figure 3-14.Blacken Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected. 
-Refer to Figure 3-14. Using a regression program, the forecasted utility cost at 2,550 machine hours (rounded to the nearest dollar) is

Quizplus · Accepted Answer

The regression equation is: 
Total Cost = Fixed Cost + (Variable Cost per Hour x Machine Hours)
Using the data given, a regression program was used to calculate the fixed and variable cost components, resulting in the equation: 
Total Cost = $13,723 + ($10.34 per hour x Machine Hours)
To calculate the forecasted utility cost at 2,550 machine hours: 
Total Cost = $13,723 + ($10.34 per hour x 2,550) = $33,147 (rounded to the nearest dollar). Therefore, the correct answer is C.