Following is the data about the cost behavior of manufacturing costs for Armor Inc.(10 pts.)

MONTH

SUPPORT COSTS

MACHINE HOURS

JANUARY

17,000

900

FEBRUARY

30,000

2,300

MARCH

21,000

1,250

APRIL

15,000

800

MAY

23,500

1,400

JUNE

45,000

4,500

JULY

25,000

1,600

AUGUST

18,500

860

Required: 1.Using the high-low method, determine the support costs function.

2.Using the cost formula you derived above, what support costs would you expect to be incurred during a month with 6,000 machine hours?

3.A least-squares regression analysis gave the following output:

Regression equation:Y = $11,267.56 + $7.70X

R =0.978

4.Which method would you recommend, the high-low or the regression method?Explain why.