GEB Company has a December 31 year end and 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, labour hours and costs. Data regarding the maintenance hours, labour hours and costs for the last year are as follows:

Month Cost Machine Hours Labour Hours

Jan 4,200 240 520

Feb 3,000 160 330

Mar 3,600 200 415

Apr 2,820 350 200

May 4,350 400 560

Jun 2,960 310 350

Jul 3,030 320 305

Aug 4,470 520 530

Sep 4,260 490 485

Oct 4,050 470 490

Nov 3,300 350 300

Dec 3,160 340 340

Total 43,200 4,150 4,825

The company is forecasting 400, 450, 500 in maintenance hours for January, February, March respectively.In addition to this the company is also forecasting January 450, February 425, March 400 labour hours during the same period.

Required:

Forecast the Maintenance costs for the first quarter using the information.Management would also like commentary on how reliable this forecast is