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The Perize Corporation used regression analysis to predict the annual cost of indirect materials. The results...

  1. The Perize Corporation used regression analysis to predict the annual cost of indirect materials. The results are as follows:

Indirect Materials Cost Explained by Units Produced

Constant                                                        $15,685

Standard error of Y estimate                         $3,500

r2                                                                    0.7832

Number of observations                                 20

X coefficient(s)                                              10.25

Standard error of coefficient(s)                      2.1876

  1. Y = $19,185 + $4.48X
  2. Y = $12,285 + $10.25X
  3. Y = $15,685 + $10.25X
  4. Y = $3,500 + $5.15X
  5. None of the above
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Answer #1

Answer : C) Y=$15,685+$10.25X

Y=A+bX

a= Constant = Fixed cost = $15,685

b= Variable cost per unit = X-Coefficinet =$10.25

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