A manufacturing company wants to develop a budget to predict how monthly maintenance costs vary with activity levels. Management is trying to decide whether hours used or units produced is the better measure of maintenance cost. Monthly data for the preceding 24 months is given below.

1. Use regression to determine which measure, Hours or Units (or both), should be used for the budget.

2. Your boss asks you to predict the maintenance cost when 1587 Hours are used and 178 Units are produced. Comment on how you would a respond to this prediction request from your boss.

Month Hours Units Maintenance Month Hours Units Maintenance 1 2 3 4 5 6 1304 111 30800 1397 114 32900 1465 133 33800 1232 129 29900 1487 147 34200 1223 130 28700 13 14 15 16 17 18 1301 138 30500 1438 123 1194 1149 34000 124 29000 1355 144 32600 120 28200 1244 120 30000 7 8 9 10 11 12 1238 122 29600 1406 119 1179 105 31600 28000 1272 125 30300 1324 145 1344 126 31600 31800 19 20 21 22 23 24 1158 106 28800 1418 150 1117 1340 121 26700 116 1334 129 33100 1387 150 31200 30900 32700