Hammer 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
January	$ 4,200	480
February	3,000	320
March	3,600	400
April	2,820	300
May	4,350	500
June	2,960	310
July	3,030	320
August	4,470	520
September	4,260	490
October	4,050	470
November	3,300	350
December	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

PART 1: If Hammer Company uses the high-low method of analysis, the equation for the relationship between hours of activity and maintenance cost follows:

Multiple Choice

y = 400 + 9.0x

y = 570 + 7.5x

y = 3,600 + 400x

y = 570 + 9.0x

None of these answer choices are correct.

PART 2: At 400 hours of activity, Hammer management can be approximately two-thirds confident that the maintenance costs will be in the range of

Multiple Choice

$3,550.50 to $3,649.53.

$3,551.37 to $3,648.51.

$3,586.18 to $3,613.93.

$3,565.54 to $3,634.48.

None of these answer choices are correct.