Question

Your boss wants you to analyze the relationship between the company's monthly operating costs and the current cost driver she has chosen. You run a regression analysis and receive the following information:

Intercept Coefficient = 653,434
X Variable 1 Coefficient 5.76
R-square= 0.3784

What is your company's monthly cost equation?

A. y = $0.38x + $576
B. y = $653,434x + $5.76
C. y = $5.76x + $653,434
D. y = $0.38% + $653,434

Answer 1

C. Y = $5.76x + $653,434

Step-by-step explanation:

Interceptor = $653434 (fixed cost)

Variable x = 5.76 (variable cost per unit)

Total Cost = Variable Cost + Fixed Cost

so equation for cost will be

Y = $5.76x + $653,434

where y is Total cost and x represents units