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The Cost Accountant for Vancouver Company Used an Excel Spreadsheet  Intercept 3,500X Variable 3.75\begin{array} { l l } \text { Intercept } & 3,500 \\\mathrm { X } \text { Variable } & 3.75\end{array}

question 108

Essay

The cost accountant for Vancouver Company used an Excel spreadsheet program to run ordinary least squares on a set of cost data for its utility cost.Vancouver's cost driver for utility cost is machine hours.The following results were produced.  Intercept 3,500X Variable 3.75\begin{array} { l l } \text { Intercept } & 3,500 \\\mathrm { X } \text { Variable } & 3.75\end{array} Required: A. Construct the cost formula for Vancouver's utility cost using the results from the method of least squares.
B. Using the formula computed in (A), what is the estimated cost of utilities for May assuming that Vancouver will incur 150,000 machine hours?

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Definitions:

Population Average

The mean value or average of all the values in a population.

Observed Z Value

A statistic measured in a dataset to determine how many standard deviations an element is from the mean.

Sample Mean

The average value of a sample set of numbers, calculated by summing all observations and dividing by the number of observations.

Population Average

The mean of a particular characteristic (e.g., age, income) of all the individuals or elements in a defined population.

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