Asked by Aaliyah Simoné on Jul 15, 2024
Verified
Lacourse Incorporated's inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on units produced.Using the least-squares regression method, the estimate of the fixed component of inspection cost per month is closest to:
A) $9,608
B) $15,640
C) $9,587
D) $15,271
Fixed Component
The part of total costs in a business that remains constant regardless of the level of production or business activity.
Least-Squares Regression
A statistical method used to determine the line of best fit by minimizing the sum of the squares of the vertical distances of the points from the line.
Units Produced
The total quantity of finished goods a company manufactures in a specific period.
- Make use of the least-squares regression method for cost behavior estimation.
Verified Answer
From the graph, we can estimate the intercept to be around $9,587. Therefore, the best choice is C.
Learning Objectives
- Make use of the least-squares regression method for cost behavior estimation.
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