Midgett Co

question 84

Multiple Choice

Midgett Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff suggested that linear regression be employed 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 are as follows:Average cost per hour ($51,840/6,270) = $8.27 (rounded to the nearest cent)
r = 0.99743
r² = 0.99487
Using the high-low method, total monthly fixed cost is calculated to be (round to nearest dollar) :

• A) $757.
• B) $687.
• C) $756.
• D) $733.
• E) $717.

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Definitions:

Population Mean

The average value of all the elements in a population, symbolically represented by the Greek letter mu (μ).

Simple Random Sample

A subset of individuals chosen from a larger set where each individual has an equal chance of being selected.

Sample Means

The average values obtained from multiple subsets of a population.

Unbiased Estimator

A statistical estimator that, on average, accurately reflects the parameter it estimates, meaning its expected value is equal to the true value of the parameter.