Armer Company Is Accumulating Data to Use in Preparing Its

question 29

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: If Armer Company uses the high-low method of analysis, the equation for the relationship between hours of activity and maintenance cost follows:

• A) y = 400 + 9.0x
• B) y = 570 + 7.5x
• C) y = 3,600 + 400x
• D) y = 570 + 9.0x
• E) None of these answer choices are correct.

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Definitions:

Lock-up Phase

The lock-up phase refers to a stage in automatic transmission where the torque converter locks, directly connecting the engine to the transmission to improve efficiency.

Vortex Flow

The rotational movement of a fluid, often characterized by a spiral pattern of flow lines.

Full Stall

A condition where an engine stops running or is unable to produce power under load, sometimes used in reference to torque converter performance in vehicles.

Coupling Phase

The stage in the process of connecting two shafts or units together so that they rotate in unison, crucial for mechanical power transmission.