Armer Company Is Accumulating Data to Use in Preparing Its

question 67

Multiple Choice

Armer Company is accumulating data to use 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 the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow:The percent of the total variance that can be explained by the regression equation is

• A) 99.724%.
• B) 69.613%.
• C) 80.982%.
• D) 99.862%.
• E) None of these answer choices are correct.

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Definitions:

LIFO

"Last In, First Out," an inventory management method where the most recently produced or acquired items are the first to be used or sold.

FIFO

An accounting and inventory method where the first items produced or acquired are the first ones to be sold or used, standing for "First-In, First-Out".

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company’s use of its assets in generating sales revenue or sales income to the firm.