The statistician for Falcon, Inc. has developed the following Regression cost-prediction information, using observations from a relevant range of 17,000 to 31,000 machine hours: Fixed Cost (intercept) component = $236,000 Variable Cost component = $3,7625 Y = total maintenance cost, X = machine hours Using a Cost Formula, what would be the predicted maintenance cost at 20,000 machine hours of activity? A. $311,250 B. $291,200 C. $268,029 D. $330,900 E. None of the above is within $1,000 of the correct answer. Would management expect total maintenance cost at zero machine hours to be $236,000? A. Yes B. No When performing cost estimation analysis, some data points may seem unusual or otherwise out-of-line with the data as a whole. These observations are deemed to be: A. Insignificants. B. Outliers. C. Errors. D. Degrees of Freedom. E. ANOVL As a Certified Management Accountant, Emily is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate? A. Competence B. Confidentiality C. Integrity D. Pressure E. Rationalization Use the following information for question 25-27: Zeigler, Inc. produces quality Chess sets for academic office-hours competition. The company expects the following sales and expenses for the year for its top of the line “Excellent Student” (ES) brand of silver-plated sets. Set up a CM template, use the equation method, and determine how many units (sets) must be sold to break-even. and indicate your conclusion. Using the “Equation method”, what sales dollar amount of Excellent Student series sets must be sold to earn a pre-tax profit of $120,000? and indicate your conclusion. Using the “Equation Method”, what sales dollar amount of Excellent Student series sets must be sold to earn an after-tax profit of $120,000? and indicate your conclusion.

## Expert Answer

Answer 21.

Variable Cost Component = $3.7625

Fixed Cost Component = $236,000

Machine hours = 20,000

Maintenance Cost = Variable Cost Component * Machine hours + Fixed Cost Component

Maintenance Cost = $3.7625 * 20,000 + $236,000

Maintenance Cost = $311,250

Answer 22.

Yes, management will expect a total maintenance cost of $236,000 (fixed component) at 0 machine hours.