Mulvey Company Derived the Following Cost Relationship from a Regression

question 72

Multiple Choice

Mulvey 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 Mulvey's single product is four machine hours.Mulvey applies manufacturing overhead to production on the basis of machine hours,and its normal annual production is 50,000 cases.Mulvey's estimated variable manufacturing overhead cost for a month in which scheduled production is 5,000 cases would be:

• A)$80,000.
• B)$320,000.
• C)$240,000.
• D)$360,000.
• E)Some amount other than those given above.

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Definitions:

Smallest Observation

The smallest observation, also known as the minimum value, is the lowest value in a set of data points.

3rd Quartile

A value below which 75% of the data points in a dataset fall.

Negatively Skewed Distribution

A probability distribution that is characterized by a long tail on the left side, indicating that the bulk of the values are concentrated to the right.

Smallest Observation

The lowest value recorded in a data set.