Marigold Company makes furniture. The company controller wanted to calculate the
ID: 2328062 • Letter: M
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:
Electricity
Machine
Month
cost
hours
January
$8,000
600
February
7,200
650
March
7,500
580
April
8,200
690
Coefficients shown by a regression program are as follows:
Intercept
5,937
X Variable 1
2.8
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.)
$4,200
$7,673
$6,000
$5,440
Electricity
Machine
Month
cost
hours
January
$8,000
600
February
7,200
650
March
7,500
580
April
8,200
690
Explanation / Answer
Answer:
The correct option is (b)
Explaination:
Using the results of regression, the budgeted cost for maintanance nextmonth is:
= $5937+$2.8 * 620 machine hours
= $5937 + $1736
= $7673
So, the final answer is option (b)
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