Answer the Following Question(s)using the Information Below

question 179

Multiple Choice

Answer the following question(s) using the information below.Day Star collected the following information:
Day Star can sell 25,000 units per year, at $80 each.The company also has an offer from a subsidiary to rent its plant facilities for $2,000,000.The fixed overhead will be incurred in each alternative, but there will be a savings of $150,000 in the fixed costs under the renting alternative.
-What production level is required for Day Star to be indifferent between making or buying the part if $260,000 of fixed costs can be eliminated by buying?

• A)32,500 units
• B)26,500 units
• C)12,500 units
• D)1,000 units
• E)0 units

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Definitions:

Predicted Score

An estimate of the value of a variable or outcome derived from a statistical model or the analysis of patterns in data.

Y′

A notation often used to represent the predicted values of a dependent variable in a regression model.

Y-intercept

The point where a line crosses the Y-axis in a graph.

Regression Equation

The equation that defines the points and the line that are closest to the observed scores.