The McGraw Company Is Accumulating Data to Be Used in Preparing

question 83

Multiple Choice

The McGraw Company is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested that linear regression be employed to derive an equation in the form of y = a + bx for maintenance costs. Data regarding the maintenance hours and costs for last year and the results of the regression analysis are as follows: (CMA adapted) $$\begin{array} { l r c } & \begin{array} { c } \text { Hours of } \\\text { Activity }\end{array} & \begin{array} { c } \text { Maintenance } \\\text { Costs }\end{array} \\\text { January } & 480 & \$ 4,200 \\\text { February } & 320 & 3,000 \\ \text { March } & 400 & 3,600 \\\text { April }& 300 & 2,820 \\\text { May } & 500 & 4,350 \\\text { June }& 310 & 2,960 \\\text { July } & 320 & 3,030 \\\text { August } & 520 & 4,470 \\\text { September } & 490 & 4,260 \\\text { October } & 470 & 4,050 \\\text { November } & 350 & 3,300 \\\text { December }& 340 & 3,160 \\ \text { Sum } & 4,800 & \$ 3,200 \\ \text { Average }& 400 & 3,600 \\\text { A coefficient } & & 684.65 \\\text { B coefficient } & & 7.2884 \\\text { Standard error of the a coefficient } & 49.515 & \\\text { Standard error of the b coefficient } & 0.12126 & \\\text { Standard error of the estimate } & & 34.469 \\\mathrm { R } ^ { 2 } & & 0.99724 \\\text { T-value a } & & 13.827 \\\text { T-value b } & & 60.105\end{array}$$
-Using the high-low method to estimate cost behavior, 420 maintenance hours in a month would mean the maintenance costs would be budgeted at:

• A) $3,150.
• B) $3,600.
• C) $3,720.
• D) $3,780.

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Definitions:

Delaying Pregnancy

The intentional decision to postpone childbirth, often for personal, educational, career, or financial reasons.

Capacitation

A physiological process that sperm must undergo to gain the ability to penetrate and fertilize an egg.

Infertility

The inability to conceive a child after one year of regular, unprotected sexual intercourse or the inability to carry a pregnancy to live birth.

Colostrum

A yellowish substance containing nutrients and antibodies that is secreted by the breasts 2–3 days prior to actual milk production.