The Anthony Company Used Regression Analysis to Predict the Annual

question 105

Multiple Choice

The Anthony Company used regression analysis to predict the annual cost of utilities.The results were as follows:
$\begin{array}{ll}&\text { Utilities Cost }\\&\text { Explained by Direct Labor Hours }\\\text { Constant } & 4,500 \\\text { Standard error of } Y \text { estimate } & 595 \\\text { R-Squared } & 0.87 \\\text { No. of observations } & 30 \\\text { Degrees of freedom } & 28 \\\text { X Coefficient } & 5.02 \\\text { Standarderror of coefficient } & 0.92\end{array}$
The variable cost per direct labor hour is ________.

• A) $0.87
• B) $0.92
• C) $5.02
• D) $4,500

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Definitions:

Average Cost

The cost per unit of output, typically calculated by dividing total costs by the total quantity produced; synonymous with average total cost.

Production

The process of creating, growing, manufacturing, or improving goods and services.

Total Variable Cost

The sum of expenses that vary directly with the level of production or output, such as materials and labor.

Total Fixed Cost

The sum of all costs required to produce a good or service that do not change with the level of output.