Thane Company Is Interested in Establishing the Relationship Between Electricity

question 69

Multiple Choice

Thane Company is interested in establishing the relationship between electricity costs and machine hours. Data have been collected and a regression analysis prepared using Excel. The monthly data and the regression output follow:
$\begin{array}{lll}\text {Month}&\text {Machine Hours}&\text {Electricity Costs}\\\text { January } & 2,500 & \$ 18,400 \\\text { February } & 2,900 & 21,000 \\\text { March } & 1,900& 13,500 \\\text { April } & 3,100 & 23,000 \\\text { May } & 3,800& 28,250 \\\text { June } & 3,300& 22,000 \\\text { July } & 4,100 & 24,750\\\text { August } & 3,500 & 22,750 \\\text { September } & 2,000 & 15,500 \\\text { October } & 3,700 & 26,000 \\\text { November } & 4,700 & 31,000 \\\text { December } & 4,200 & 27,750\end{array}$


$$\begin{array}{c} { \text { Summary Output } } \\ { \text { Regression Statistics } } \\\begin{array}{ | l | c | } \hline \text { Multiple R } & 0.965 \\\hline \text { R Squuare } & 0.932 \\\hline \text { Adjusted R } ^2 & 0.925 \\\hline \text { Standard Error } & 1,425.18 \\\hline \text { Observations } & 12.00 \\\hline\end{array}\end{array}$$


$\begin{array}{|l|r|r|r|r|r|r|}\hline && \text { Standard } & && \text { Lower } & \text { Upper } \\&\text { Coefficients } & \text { Error } & \text { t Stat } & \text { P-value } & 95 \% & 95 \% \\ \hline \text { Intercept } & 3,726.88 & 1,682.82 & 2.21 & 0.05 & (22.69) & 7,476.45 \\\hline \text { Machine } & 5.77 & 0.49 & 11.7 & 0.00 & 4.67 & 6.87 \\\text { Hours } & & & & & \\\hline\end{array}$


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If the controller uses the high-low method to estimate costs, the fixed cost portion of the cost equation for electricity costs is:

• A) $3,726.88.
• B) $1,425.18.
• C) $1,625.00.
• D) $22,825.00.

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Definitions:

Fetus

A developing mammal or human after the embryonic stage and before birth.

Ectopic Pregnancy

A potentially life-threatening condition where a fertilized egg implants and grows outside the main cavity of the uterus, often in a fallopian tube.

Hydatidiform Mole

A rare growth that forms inside the womb at the beginning of a pregnancy, leading to an abnormal pregnancy.

Spontaneous Abortion

The natural ending of a pregnancy before the fetus can survive outside the womb, often referred to as a miscarriage.