Answer the Following Questions Using the Information Below:
the Nowra

question 119

Multiple Choice

Answer the following questions using the information below:
The Nowra Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable.Nowra Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
$$\begin{array} { l r r } \text { Month } & \text { Cost } & \text { Hours } \\\text { January } & \$ 40000 & 3500 \\\text { February } & 24400 & 2000 \\\text { March } & 31280 & 2450 \\\text { April } & 36400 & 3000 \\\text { May } & 44160 & 3900 \\\text { June } & 42400 & 3740\end{array}$$
-The Canberra Corporation used regression analysis to predict the annual cost of indirect materials.The results were as follows:
$\text { Indirect Materials Cost Explained by Units Produced }$
$\begin{array}{lr}\text { Constant } & \$ 21890 \\\text { Standard error of } Y \text { estimate } & \$ 4560 \\\mathrm{r}^{2} & 0.7832 \\\text { Number of observations } & 22 \\& \\\text { X coefficient(s) } & 11.75 \\\text { Standard error of coefficient(s) } & 2.1876\end{array}$
What is the linear cost function?

• A)Y = $4560 + $5.15X
• B)Y = $20 100 + $4.60X
• C)Y = $21 890 + $11.75X
• D)None of these answers are correct.

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