Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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: Maintenance Month Cost Machine Hours Jan. $ 5,150 860 Feb. 3,950 700 Mar. 4,550 780 Apr. 3,770 680 May 5,300 880 June 3,910 690 July 3,980 700 Aug. 5,420 1,000 Sept. 5,210 870 Oct. 5,000 850 Nov. 4,250 730 Dec. 4,110 720 Sum $54,600 9,460 Average $ 4,550 788 Average cost per hour $ 6.00 a (intercept) $125.3539 b (coefficient) 5.9307 Standard error of the estimate 171.8873 R-squared 0.9314 t-value for b 11.6480 If Armer Company uses the high-low method of analysis, the equation for the relationship between hours of activity and maintenance cost follows: (Round your answers to 1 decimal place.) Multiple Choice O y =4.550 - 788x 0 = 234 - 6x O y= 220 -5.2x

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Hartgraves And Morse

6th Edition

1934319805, 978-1934319802

More Books

Students also viewed these Accounting questions