Blacken Company manufactures motorcycles. The company\'s management accountant w
ID: 2410770 • Letter: B
Question
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.
Month
Utility
cost
Machine
hours
March
$30,255
2,200
April
32,750
2,525
May
34,712
2,710
June
31,850
2,410
July
30,720
2,290
Using a regression program, the forecasted utility cost at 2,550 machine hours (rounded to the nearest dollar) is
a. $28,288.
b. $37,116.
c. $33,147. = How ?
d. $10,631.
Month
Utility
cost
Machine
hours
March
$30,255
2,200
April
32,750
2,525
May
34,712
2,710
June
31,850
2,410
July
30,720
2,290
Explanation / Answer
Answer
c ) 33147
variable rate per machine = ( 34712 - 30720 ) / ( 2710 - 2290 )
= 3992 / 420
= 9.5
fixed cost of utilites = 34712 - 9.5 * 2710
= 8967
total cost of utilites = 8967 + ( 9.5 * 12135 )
= 124249.5
cost of utilites 2550 mach = 8967 + ( 9.5 * 2550 )
= 33192
c = 33147
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