Ben and Mildred's Stables Used Two Different Independent Variables (Trainer

question 103

Multiple Choice

Ben and Mildred'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's hours:

R² = 0.56
Number of horses:

R² = 0.63
What is the estimated total cost for the coming year if 14,700 trainer hours are incurred and the stable has 310 horses to be trained,based upon the best cost driver?

• A)$7,992.85
• B)$300,276.50
• C)$332,343.45
• D)$13,995,671.20

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Definitions:

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the expense to convert raw materials into finished products.

Average Cost Method

An inventory costing method that calculates the cost of goods sold based on the average cost of all similar items in inventory.

Equivalent Unit

A measure used in cost accounting to express the amount of work done by manufacturers on units that are partially completed at the end of an accounting period.

Applied Overhead

The portion of overhead costs allocated to specific jobs or departments based on a predetermined rate.