For a Simple Regression Analysis Model That Is Used to Allocate

question 101

Multiple Choice

For a simple regression analysis model that is used to allocate factory overhead, an internal auditor finds that the intersection of the line of best fit for the overhead allocation with the y-axis is $5,000. The slope of the line is .20. The independent variable, factory wages, amounts to $900,000 for the month. What is the estimated amount of factory overhead to be allocated for the month?

• A) $65,000.
• B) $180,000.
• C) $230,000.
• D) $92,500.
• E) $185,000.

---

Definitions:

Independent Contractor

An individual or entity contracted to perform work for another party without being subject to the hiring party's control over the details of the work's performance.

Reimbursement

Compensation for money already spent or costs incurred by an individual, typically by their employer or another organization.

Employment

A formal relationship between an employer and an employee where the employee performs work or services in exchange for compensation.

Confidential Information

Sensitive data or knowledge not to be disclosed to unauthorized persons, often protected by legal or contractual agreement.