57. (High-low; least squares regression) Andrews Company manufactures insulated windows. The firm has encountered a problem in budgeting repairs and maintenance.

The cost is apparently a mixed cost and varies most directly with machine hours worked. However, management does not know the exact relationship between machine hours and repairs and maintenance. The following data have been gathered from recent operations and may help describe the relationship:

Month Machine Hours Repairs and Maintenance May 1,400 $ 9,000 June 1,700 9,525 July 2,000 10,900 August 1,900 10,719 September 2,300 11,670 October 2,700 13,154 November 2,500 13,000 December 2,200 11,578

a. How can you tell from the data that repairs and maintenance is a mixed cost?

b. Use the high-low method to estimate a cost formula for repairs and maintenance.

c. Use least squares regression to estimate a cost formula for repairs and maintenance.

d. Does the answer to part

(b) or

(c) provide the better estimate of the relationship between repairs and maintenance costs and machine hours? Why?