The Method of Least Squares Was Used to Develop a Cost

question 57

Multiple Choice

The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance.The following computer output was received: ​
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The driver used was the number of machine hours.
Using the cost formula for the equipment maintenance cost, what is the predicted cost of equipment maintenance for April, assuming that 8,000 machine hours will be logged in April?

• A) $185,000
• B) $140,000
• C) $200,000
• D) None of these are correct.

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Definitions:

Equivalent Units Of Production

A calculation used in the production process to equate the amount of work done on partially finished goods to the quantity of completed goods.

Process Costing

A method of costing used to ascertain the cost of a product at each process or stage of manufacture.

Direct Materials

Raw materials that are directly traceable to the production of a specific product or service.

Work in Process Inventory

Work in Process Inventory represents the cost of incomplete goods in the manufacturing process, including labor, raw materials, and overhead costs.