If the Least Squares Equation for Sales Data Going from 2004

question 113

Multiple Choice

If the least squares equation for sales data going from 2004 to 2008 is Ŷ = 10 + 1.3t (in $millions) , what is the value of t and the forecast for 2010?

• A) t = 6, Ŷ = 17.8
• B) t = 0, Ŷ = 10.0
• C) t = 7, Ŷ = 19.1
• D) t = 10, Ŷ = 0.0

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Definitions:

Standard Overhead Rate

The rate at which indirect costs are allocated to products or services based on a pre-determined basis, such as labor hours or machine hours.

Direct Labour Hour

A measure of the amount of time workers spend on a specific task, directly involved in the production of goods or services.

Standard Costing System

A cost accounting system that estimates the cost of products in advance, based on standard inputs of materials, labor, and overhead.

Variable Costing

An accounting method that only includes variable production costs in product costs, excluding fixed overhead.