Question: 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

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 0.80

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.

Based on this information, what is the budgeted amount for Cost Pool A for next month?

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