Burmer CoHas Accumulated Data to Use in Preparing Its Annual Profit

question 71

Multiple Choice

Burmer 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.Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows:
A staff assistant has run regression analyses on the data and obtained the following output using Excel:
The t statistic for the independent variable:

• A)Is statistically significant at less than 5% risk.
• B)At 11.46,is statistically significant.
• C)At 52.78,is too large to be statistically significant.
• D)Lies somewhere between 6.491 and 7.063. The t statistic is 52.78,and is considerably larger than the desired level of 2.0;the p-value or risk level is.000000000000144 which is significantly less than a risk level of 5%.

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Definitions:

Asset Classes

Categories of assets with similar characteristics and behavior in the marketplace, such as stocks, bonds, real estate, and cash.

Securities

Assets indicating an equity share in a publicly-listed firm (stock), a lending arrangement with a corporation or government (bond), or ownership rights via options.

Agency Problem

A conflict of interest between the principals, such as shareholders, and the agents managing the company, like executives or managers.

Empire Building

A strategy where a company's executives expand their organization's size and operations, often to increase power and control, regardless of shareholder benefit.