The cost accountant for Vancouver Company used an Excel spreadsheet program to run ordinary least squares (regression) method on a set of monthly cost data for its utility cost. Vancouver's cost driver for utility cost is machine hours. The following results were produced.
Intercept 3,500
X Variable 3.75
Required:
A. Construct the cost formula for Vancouver's utility cost using the results from the least squares (regression) method.
B. Using the formula calculated in (A), calculate the estimated cost of utilities for May assuming that Vancouver will incur 150,000 machine hours?

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The Answer of The cost accountant for Vancouver Company used an Excel spreadsheet program to run ordinary least squares (regression) method on a set of monthly cost data for its utility cost. Vancouver's cost driver for utility cost is machine hours. The following results were produced.
Intercept 3,500
X Variable 3.75
Required:
A. Construct the cost formula for Vancouver's utility cost using the results from the least squares (regression) method.
B. Using the formula calculated in (A), calculate the estimated cost of utilities for May assuming that Vancouver will incur 150,000 machine hours?

The Cost Accountant for Vancouver Company Used an Excel Spreadsheet