Chesley Corporation, Which Uses Least-Squares Regression Analysis, Has Derived the Following

question 74

Multiple Choice

Chesley Corporation, which uses least-squares regression analysis, has derived the following regression equation for estimates of manufacturing overhead: Y = 495,000 + 5.65X. Which of the following statements is true if the primary cost driver is machine hours?

• A) Total manufacturing overhead is represented by the variable "X."
• B) The company anticipates $495,000 of fixed manufacturing overhead.
• C) "X" is commonly known as the dependent variable.
• D) "X" represents the number of machine hours.
• E) The company anticipates $495,000 of fixed manufacturing overhead and "X" represents the number of machine hours.

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Definitions:

Note Receivable

A written promise to pay a specified amount of money, usually with interest, at a future date; it is recorded as an asset on the balance sheet.

Due Date

The specific date by which a payment must be made or a task must be completed.

Promissory Note

A written promise to pay a specified sum of money to a certain individual or entity at a specified date or on demand.

Face Amount

An amount at which bonds sell if the market rate equals the contract rate.