Problem: Roger Co. implemented activity-based costing in the current year. To select the appropriate driver for Cost Pool A, Roger performed regression analyses for two independent variables, Driver 1 and Driver 2, using monthly operating data. The monthly levels of Cost Pool A were the dependent variables in both regressions. Output results from the regression analyses were as follows:
|
|
Driver 1
|
Driver 2
|
|
R squared
|
0.46
|
0.8
|
|
Intercept
|
$551.00
|
$970.00
|
|
X variable (slope)
|
$0.55
|
$0.33
|
At the budgeted production level for next month, the levels of Driver 1 and Driver 2 are expected to be 5,880 and 7,000, respectively.
Required: Based on this information, what is the budgeted amount for Cost Pool A for next month?
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