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0 Required information [The following information applies to the questions displayed below controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firms costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-miaterials cost. She believes there is a correlation between machine hours and the amount of indirect materials used. A member of the controllers staff has suggested that least-squares regression be used to determine the cost behavior of indirect materials. The regression equation shown below was developed from 40 pairs of observations, s- $200+$9H where S Total monthly cost of indirect materials H- Machine,hours per month 2. Calculate the estimated cost of indirect materials if 900 machine hours are to be used during a month. (Assume that 900 falls within the relevant range for this cost equation.) ated cost of indirect materials Next > < Prex 11 12 13 14 of 14
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