Bobbys Garage offers oil changes, brake checks, and repairs for cars. The management accountant at Bobbys garage suspects that indirect materials in the workshop are a variable overhead cost, and that this cost is driven by the number of cars being worked on (# of jobs). Indirect materials include lubes, small nuts and bolts, as well as cleaning supplies. To support his theory (i.e., that indirect materials is a variable cost), the accountant uses data from the last 60 months and runs a regression analysis with indirect materials costs as the dependent variable and # of jobs as the independent variable. The number of jobs reaches about 100 in an average month, but there is also substantial variation in the relevant range.

The following table summarizes the regression output:

Variable Coefficient Standard of Error TValue

Constant $2,365 $850 2.78

Idependent variable # of jobs $25.50 $7.88 3.24

R2=.56

Which of the following conclusions is incorrect? I repeat: incorrect.

	A.	The analysis supports the accountant's theory.
	B.	The regression output suggests that if there were zero jobs in a month, the indirect materials cost would be $850.
	C.	Indirect materials is a mixed cost.
	D.	The number of jobs has a positive effect on the indirect materials cost. This effect is statistically significant as well as economically meaningful