Suppose a Rental Car Company Uses Simple Linear Regression to Develop

question 41

Multiple Choice

Suppose a rental car company uses simple linear regression to develop an equation that predicts the repair costs for each of its vehicles based on the mileage of the car (total miles driven) .The company uses the following data on repair costs and miles driven for five of its cars: The least squares line would predict annual repair costs of $______ for a car with 60,000 miles on the odometer (rounded to the nearest whole dollar) .

• A)646
• B)837
• C)1385
• D)831,006

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Definitions:

Direct Labor-Hours

The total hours of labor directly involved in manufacturing products or providing services.

Direct Materials Cost

The cost of raw materials and components that are directly traceable to the finished product.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities they require and the resources consumed by these activities.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, directly affecting the production of goods.