Marigold Company makes furniture.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 as follows:

Coefficients shown by a regression program are as follows:

Using the results of regression, what would be the total budgeted cost for electricity next month assuming that 620 machine hours are budgeted? (Round to the nearest dollar.)
A) $5,440
B) $6,000
C) $7,673
D) $4,200

Question

Marigold Company makes furniture.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 as follows:

Coefficients shown by a regression program are as follows:
 
 Using the results of regression, what would be the total budgeted cost for electricity next month assuming that 620 machine hours are budgeted? (Round to the nearest dollar.)
A) $5,440 
B) $6,000 
C) $7,673 
D) $4,200

Quizplus · Accepted Answer

Total Cost = Fixed Cost + (Variable Rate × Machine Hours) = $5,937 + ($2.8 × 620) = $7,673

Marigold Company Makes Furniture