Armer Company is accumulating data to use in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow:

Month Maintenance Cost Machine Hours

Jan. $ 4,200 480

Feb. 3,000 320

Mar. 3,600 400

Apr. 2,820 300

May 4,350 500

June 2,960 310

July 3,030 320

Aug. 4,470 520

Sept. 4,260 490

Oct. 4,050 470

Nov. 3,300 350

Dec. 3,160 340

Sum $ 43,200 4,800

Average $ 3,600 $ 400

Average cost per hour $ 9.00

a (intercept) $ 684.65

b (coefficient) 7.2884

Standard error of the estimate 34.469

R-squared 0.99724

t-value for b 60.105

The percent of the total variance that can be explained by the regression equation is

Multiple Choice

99.862%.

None of these answer choices are correct.

99.724%.

69.613%.

80.982%.