The Management of Hamano Corporation Would Like for You to Analyze

question 66

Multiple Choice

The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below: $\begin{array}{lcc} & \begin{array}{c}\text { Machine- } \\\text { Hours }\end{array} & \begin{array}{c}\text { Repair } \\\text { Costs }\end{array} \\\text { April } & 4,459 & \$ 98,523 \\\text { May } & 4,426 & \$ 98,296 \\\text { June } & 4,493 & \$ 98,781 \\\text { July } & 4,417 & \$ 98,207 \\\text { August } & 4,432 & \$ 98,349 \\\text { September } & 4,446 & \$ 98,420 \\\text { October } & 4,489 & \$ 98,749 \\\text { November } & 4,475 & \$ 98,654\end{array}$ Management believes that repair cost is a mixed cost that depends on the number of machine-hours. Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to:

• A) $22.11 per machine-hour plus $98,497 per month
• B) $7.37 per machine-hour plus $65,670 per month
• C) $8.19 per machine-hour plus $62,015 per month
• D) $7.55 per machine-hour plus $64,859 per month