The McGraw Company Is Accumulating Data to Be Used in Preparing

question 19

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)

Based upon the data derived from the regression analysis,420 maintenance hours in a month would mean the maintenance costs would be budgeted at: (rounded to the nearest whole dollar)

• A) $3,797.
• B) $3,780.
• C) $3,746.
• D) $3,600.

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Definitions:

Working Units

Working Units are the functional divisions or departments within an organization, each specialized in specific tasks or operations that contribute to the overall objectives of the entity.

Corporate Culture

The shared values, beliefs, and practices that define the behavior of an organization and its employees.