The McGraw Company Is Accumulating Data to Be Used in Preparing

question 93

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 is the variable cost per hour using the high-low method to estimate the cost equation?

• A) $9.00.
• B) $7.50.
• C) $0.1333.
• D) $0.1111.

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Definitions:

Cost-Benefit Evaluation

An analysis process that compares the estimated costs and benefits of a project or decision to determine its feasibility or value.

Differences

Variations or disparities among individuals, objects, or processes.

Financial Results

The numeric outcome of an organization's financial activities over a specific period, including profits, losses, revenue, and expenses.

HR Professionals

Individuals specializing in managing human resources, focusing on recruitment, management, and providing direction for the people who work in an organization.