What electricity cost does the cost equation estimate for a level of activity of 500 machine hours?
Electricity Cost: $[Fill in the blank]

By what amount does this differ from March's observed cost for 500 machine hours?
Amount differ: $[Fill in the blank]

Question

What electricity cost does the cost equation estimate for a level of activity of 500 machine hours?
Electricity Cost: $[Fill in the blank]

By what amount does this differ from March's observed cost for 500 machine hours?
Amount differ: $[Fill in the blank]

BlackTom AI · Accepted Answer

A linear cost equation separates fixed and variable components: Electricity Cost = Fixed cost + (Variable cost per machine hour × machine hours). Using the provided cost equation (Fixed = $2,310; Variable rate = $3.20 per machine hour):

Step-by-step calculation for 500 machine hours:
1. Variable component = 3.20 × 500 = 1,600.
2. Total predicted electricity cost = Fixed + Variable = 2,310 + 1,600 = 3,910.

Thus the cost equation estimates $3,910 for 500 machine hours.

To find how this differs from March’s observed cost for 500 machine hours, use the March observed cost from the data (given as $4,310). Compute the difference:
1. Difference = Observed − Predicted = 4,310 − 3,910 = 400.

Interpretation: the predicted cost ($3,910) is $400 less than March’s observed cost ($4,310). The absolute difference is $400.

Why this is correct:
- The cost equation correctly decomposes cost into fixed and variable parts; plugging in 500 hours correctly yields $3,910.
- Subtracting the predicted value from the observed value gives the magnitude of the discrepancy ($400), showing the model underestimates March’s actual cost by that amount.

Other choices (if any alternative numeric estimates) would be incorrect because they would either use the wrong fixed or variable component or make an arithmetic error in multiplying 3.20 by 500 or adding the fixed cost.

Final answers confirmed: Electricity Cost = $3,910; Amount differ = $400.

What electricity cost does the cost equation estimate for a level of activity of 500 machine hours? Electricity Cost: $[Fill in the blank] By what amount does this differ from March's observed cost for 500 machine hours? Amount differ: $[Fill in the blank] 多项填空题

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