2. Maintenance costs at a Gibson Corporation factory are listed below:

Management believes that maintenance cost is a mixed cost that depends on machine-hours.

Using Excel, prepare a scattergraph of the above data. Print and attach a copy of the graph. Comment on the strength of the relationship. Does it appear that machine hours is a good predictor of maintenance cost? (1 points)

Using the high/low method, write an equation to estimate total maintenance cost for any level of machine hours. (2 points)

With the above equation, what is the expected maintenance cost if it is estimated that 3,117 machine hours will be used in December?

Using Excel, run a simple regression on the data provided. Print and attach a copy of the summary output. Write an estimating equation using the regression results. (2 points)

Using the regression equation, what is the expected maintenance cost if it is estimated that 3,117 machine hours will be used in December?

What causes the difference between the results of high/low and regression? Which method is more accurate? Explain why.

Machine-Hours Maintenance Cost 3,135 3,095 3,133 3,157 3,065 3,076 3,084 3,125 3,098 S48,340 $47,993 S48,345 $48,548 $47,733 $47,830 $47,880 $48,247 $48,014 May July August September