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Midgett Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattem of the maintenance costs
Midgett Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattem of the maintenance costs must be determined. The accounting staff suggested that linear regression be employed 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 are as follows: Jan. Har Apr. Maintenance Machine Month Cout Hours $ 5,040 540 Feb. 3.641 400 4,450 3,344 480 May 5,232 610 June 3,650 430 July 3,518 420 Aug. 5,350 710 Sept. 5,110 570 Oct. 4,862 580 3,926 470 3,870 400 $ 51,993 6,090 Average $4,332.75 507.50 Nov. Dec. Average cost per hour ($51,993/6,090) = $9.54 (rounded to the nearest cent) r=0.87671 2076862 The percent of the total variance that can be explained by the regression equation is: Multiple Choice 46.752% O 76.724% O O 76.862% O 76.903% O 58131%
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