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

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 coefficient of determination for Armer's regression equation for the maintenance activities is

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_2

Step: 3

blur-text-image_3

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

Accounting Essentials For Hospitality Managers

Authors: Chris Guilding

3rd Edition

0415841097, 978-0415841092

More Books

Students also viewed these Accounting questions