Ken Howard, financial analyst at XYZ Corporation, is examining the behavior of quarterly maintenance costs for budgeting purposes. Howard collects the following data on machine-hours worked and maintenance costs for the past 12 quarters (Click the icon to view the data.) Requirements 1. Estimate the cost function for the quarterly data using the high-low method. Data table 2. Plot and comment on the estimated cost function. 3. Howard anticipates that XYZ will operate machines for 80,000 hours in quarter 13. Calculate the predicted maintenance costs in quarter 13 using the cost function estimated in requirement 1. 50.000500000.0025.00500075.000 Machine Hours Click to enlarge graph Comment on the estimated cost function by choosing the correct statement to go with each of the evaluation criteria listed below. Economic plausibility O The cost function shows a negative economically plausible relationship between machine-hours and maintenance costs. There is not a clear-cut engineering relationship of higher machine-hours and m The cost function shows a positive economically plausible relationship between machine-hours and maintenance costs. There is a clear-cut engineering relationship of higher machine-hours and mainta Goodness of fit The high-low line appears to "fr" the data well. The vertical differences between the actual and predicted costs appear to be quite small O The high-low line appears to not "fi" the data well. The vertical differences between the actual and predicted costs appear to be quite large. Slope of high-low line O The slope of the line appears to be unreasonably steep indicating that, on average, maintenance costs in a quarter do not vary with machine-hours used O The slope of the line appears to be reasonably steep indicating that, on average, maintenance costs in a quarter vary with machine-hours used. Requirement 3. Howard anticipates that XYZ will operate machines for 80,000 hours in quarter 13. Calculate the predicted maintenance costs in quarter 13 using the cost function estimated in requirement 1. The predicted maintenance costs would be $for quarter 13. Quarter Machine-Hours Maintenance Costs 1 80,000 S 185,000 2 100,000 220,000 3 90,000 200,000 4 110,000 240,000 5 75,000 170,000 6 95.000 215,000 7 85,000 195,000 8 105,000 235,000 9 85,000 190,000 10 105,000 225.000 11 12 95,000 125,000 180,000 260,000 Print Done Next Ken Howard, financial analyst at XYZ Corporation, is examining the behavior of quarterly maintenance costs for budgeting purposes. Howard collects the following data on machine-hours worked and maintenance costs for the past 12 quarters: (Click the icon to view the data.) Requirements Data table L Estimate the cost function for the quarterly data using the high-low method. 2. Plot and comment on the estimated cost function. 3. Howard anticipates that XYZ will operate machines for 80,000 hours in quarter 13. Calculate the predicted maintenance costs in quarter 13 using the cost function estimated in requirement 1. Quarter 1 Machine-Hours 80,000 Maintenance Costs S 185,000 2 100,000 220,000 Requirement 1. Estimate the cost function for the quarterly data using the high-low method. (Complete all answer boxes.) Y x 3 90,000 200.000 4 110,000 240.000 5 75.000 170.000 (After you hit continue, the screen may take you below the beginning of the next step. If so, scroll back up to the top of the step.) Requirement 2. Plot and comment on the estimated cost function. 6 95,000 215,000 7 85,000 195,000 Plot the line for the estimated cost function using the high-low method. The data points for the 12 quarters have already been entered in for you. (Use the line tool button displayed below to draw the graph) Q 8 105,000 235,000 9 85,000 10,000 10 105,000 225,000 11 95.000 180.000 B 12 125,000 260.000 50.0005,000.002.000.0025,000 Machine Hours Click to enlarge graph Comment on the estimated cost function by choosing the correct statement to go with each of the evaluation criteria listed below. Economic plausibility O The cost function shows a negative economically plausible relationship between machine-hours and maintenance costs. There is not a clear-cut engineering relationship of higher machine-hours and maintanance costs The cost function shows a positive economically plausible relationship between machine-hours and maintenance costs. There is a clear-cut engineering relationship of higher machine-hours and maintenance costs Print Done Next