Figure 3-8 The following computer printout estimated overhead costs using multiple regression:
During the year the company used 1,000 setup hours and 500 parts.
Refer to Figure 3-8. What is the predicted overhead cost?
A) $2,500
B) $75,000
C) $76,000
D) none of these

Question

Figure 3-8 The following computer printout estimated overhead costs using multiple regression:
 During the year the company used 1,000 setup hours and 500 parts.
Refer to Figure 3-8. What is the predicted overhead cost?
A) $2,500 
B) $75,000 
C) $76,000 
D) none of these

Quizplus · Accepted Answer

From the printout, the estimated regression equation is:
Overhead cost = $26,000 + ($5 per setup hour × number of setup hours) + ($140 per part × number of parts)
Plugging in the given numbers, we get:
Overhead cost = $26,000 + ($5 × 1,000) + ($140 × 500)
Overhead cost = $26,000 + $5,000 + $70,000
Overhead cost = $76,000
Therefore, the predicted overhead cost is $76,000.

Figure 3-8 the Following Computer Printout Estimated Overhead Costs Using