5-32. (20 min.) Interpretation of Regression ResultsMultiple Choice: Cortez Company.

a. (1) R2 = .848 (84.8%), the explanation of variation in Y from the X regressor.

b. (2) $370,000. The equation resulting from this regression analysis is

Total overhead = Estimated fixed cost + estimated variable cost per labor-hour x labor-hours

= Intercept estimate + Coefficient estimate on independent variable x 50,000 DLH

= $120,000 + $5 x 50,000 DLH = $120,000 + $250,000

= $370,000

c. (2) $82

Total labor-hours = Total direct labor costs Direct labor wage rate = $640,000 $16 per hour

= 40,000 direct labor-hours Labor-hours per unit = Total labor hours Total units

= 40,000 20,000 = 2 labor-hours per unit

Total variable cost per unit = Direct materials + Direct labor + Variable overhead

= ($800,000 20,000) + ($640,000 20,000) + $5 x 2 labor-hours

= $40 + $32 + $5 x 2 labor-hours

= $82

d. (4) $14

Contribution-margin per unit = Price variable cost per unit = $96 $82

= $14 e.

(4) Some other equation:

Total manufacturing cost = Fixed manufacturing cost + Variable manufacturing cost

= $120,000 + $82 x units