Armer Company Is Accumulating Data to Use in Preparing Its

question 91

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:At 400 hours of activity, Armer management can be approximately two-thirds confident that the maintenance costs will be in the range of

• A) $3,550.50 to $3,649.53.
• B) $3,551.37 to $3,648.51.
• C) $3,586.18 to $3,613.93.
• D) $3,565.54 to $3,634.48.
• E) None of these answer choices are correct.

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Definitions:

Operating Activities

The component of cash flow statement that reflects the cash generated or used by the core business operations.

Net Cash

The amount of cash available after accounting for cash inflows and outflows, indicating a company's liquidity.

Indirect Method

A method of reporting net cash flow from operating activities on the cash flow statement by adjusting net income for changes in the balance sheet accounts.

Depreciable Asset

An asset that loses value over time due to wear and tear, decay, or decline in usefulness, and whose cost can be allocated over its useful life.