A Manager Wishes to Predict the Annual Cost (Y)of an Automobile

question 109

Multiple Choice

A manager wishes to predict the annual cost (y) of an automobile based on the number of miles (x) driven.The following model was developed: ŷ = 2,000 + 0.42x.If a car is driven 20,000 miles, the predicted cost is ____________.

• A)10,400
• B)20,000
• C)2,840
• D)6,200
• E)6,750

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Definitions:

Transferred Out

Transferred Out is a term often used in accounting and inventory control to denote goods or assets moved from one department, location, or account to another.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, computed by taking the number of partially completed units and converting them into a number of fully completed units.

Total Materials Costs

The total expense incurred by a company for the materials that are used in the production process of its goods or services.

Manufacturing Cost

Direct expenditures involved in creating goods, such as components, employee wages, and additional production overhead.