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Your Boss Wants You to Analyze the Relationship Between the Company's

question 164

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Your boss wants you to analyze the relationship between the company's monthly operating costs and the current cost driver she has chosen. You run a regression analysis and receive the following information: Intercept Coefficient = 653,434
X Variable 1 Coefficient = 5.76
R-square = 0.3784
What is your company's monthly cost equation?

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Definitions:

Raw Material

Basic substances in their natural, modified, or semi-processed state used as inputs to a production process for manufacturing goods.

Beginning Inventory

The value of all inventory held by a company at the start of an accounting period, which includes raw materials, work-in-progress, and finished goods.

Merchandise Purchases

The acquisition of goods that a company intends to sell in its normal course of business; this includes goods bought for resale.

Cost Of Goods

The total direct costs attributable to the production of the goods sold by a company.

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