Bradford Company Derived the Following Cost Relationship from a Regression

question 78

Multiple Choice

Bradford Company derived the following cost relationship from a regression analysis of its monthly manufacturing overhead cost:
C = $80,000 + $12M
where:
C = monthly manufacturing overhead cost, and
M = machine hours
The standard error of estimate of the regression is $6,000. The standard time required to manufacture one six-unit case of Bradford's single product is two machine hours. Bradford applies manufacturing overhead to production on the basis of machine hours, and its normal annual production is 50,000 cases.
Bradford's estimated variable manufacturing overhead cost for a month in which scheduled production is 5,000 cases would be:

• A) $80,000.
• B) $120,000.
• C) $140,000.
• D) $200,000.
• E) Some amount other than these answer choices.