The McGraw Company Is Accumulating Data to Be Used in Preparing

question 42

Multiple Choice

The McGraw Company is accumulating data to be used in preparing its annual profit plan for the coming year.The cost behavior pattern of the maintenance costs must be determined.The accounting staff has suggested that linear regression be employed to derive an equation in the form of y = a + bx for maintenance costs.Data regarding the maintenance hours and costs for last year and the results of the regression analysis are as follows: (CMA adapted)

What would be the cost equation if regression analysis is used?

• A) Maintenance Costs = 7.2884 + 684.65 × Hours of Activity.
• B) Maintenance Costs = 684.65 + 49.515 × Hours of Activity.
• C) Maintenance Costs = 684.65 + 7.2884 × Hours of Activity.
• D) Maintenance Costs = 34.469 + .99724 × Hours of Activity.

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Definitions:

Dietician

A healthcare professional who specializes in nutrition and dietary planning to promote health and manage diseases.

Hospice Palliative Care

Care designed to provide comfort and support to patients and their families during a life-limiting illness, with a focus on quality of life rather than cure.

Specialized

Specialized refers to a high degree of focus, skill, or knowledge in a specific area or field, usually acquired through education or experience.