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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
A portion of the total costs that remains unchanged regardless of the level of production or business activity.
Inspection Cost
The expenses associated with the activity of ensuring that a product or service meets specified standards of quality.
Least-squares Regression
A statistical method used to determine a line of best fit by minimizing the sum of the squares of the differences between observed and predicted values.
- Comprehend and utilize the least-squares regression technique for cost behavior analysis.
- Ascertain the fixed expenditure per period.
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Learning Objectives
- Comprehend and utilize the least-squares regression technique for cost behavior analysis.
- Ascertain the fixed expenditure per period.
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