Speedy Copy Centre operates a chain of photocopy centres near several major universities. The firm's accountant is accumulating data to be used in preparing its annual budget for the coming year. The cost behaviour pattern of the firm's equipment maintenance costs must be determined. Data regarding number of photocopies, maintenance hours and costs for last year are as follow:

Required:
1. Use Excel* and multiple regression analysis to estimate the behaviour of Speedy Copy Centre's maintenance costs.
2. Calculate R2 and interpret this statistic.
3. Calculate the total variable cost and the fixed cost per maintenance hour at 1500 hours of maintenance and 255,000 photocopies. Explain the problems that might occur when using fixed cost per hour in decisions.

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Month Number of photocopies Hours of maintenance service Maintenance costs January 240 000 $ 14 130 1575 February 204 000 1515 12 930 March 207 000 930 8970 April 192 000 1485 12 600 May 270 000 9 000 945 June 255 000 1455 12 645 July 165 000 945 8 850 August 255 000 1215 11 040 September 186 000 1425 12 300 October 9 750 246 000 1035 November 180 000 1050 9780 210 000 December 9 045 1005 2 610 000 Total 14 580 $131 040 217 500 $ 10 920 Average 1215