Answer the Following Questions Using the Information Below:
the Nowra

question 4

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.
$$\begin{array} { l r r } \text { Month } & \text { Cost } & \text { Hours } \\\text { January } & \$ 40000 & 3500 \\\text { February } & 24400 & 2000 \\\text { March } & 31280 & 2450 \\\text { April } & 36400 & 3000 \\\text { May } & 44160 & 3900 \\\text { June } & 42400 & 3740\end{array}$$
-Pam's Stables used two different independent variables (trainer hours and number of horses) in two different equations to evaluate the cost of training horses.The most recent results of the two regressions are as follows:
Trainer hours:
$\begin{array} { l r r r } \text { Variable } & \text { Coefficient } & \text { StandardError } & \text {-Value } \\ \text { Independent Variable } & \$ 913.32 & \$ 198.12 & 4.61 \\\text { Constant }& \text { S20.90 } & \$ 2.94 & 7.11 \end{array}$
$$r ^ { 2 } = 0.56$$
Number of horses:
$\begin{array}{l}\begin{array}{lrrr}\text { Variable } & \text { Coefficient } & \text { StandardError } & \text {-Value } \\ \text { Constant } & \$ 4764.50 & \$ 1073.09 & 4.44 \\\text { Independent Variable } & \$ 864.98 & \$ 247.14 & 3.50\end{array}\\r^{2}=0.63\end{array}$
What is the estimated total cost for the coming year if 16 000 trainer hours are incurred and the stable has 400 horses to be trained,based on the best cost driver?

• A)$335 313.32
• B)$350 756.50
• C)$13 844 444.50
• D)$99 929.09

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