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Please help me solve! Fact Pattern: Armer Company is accumulating data to be used in preparing its annual profit plan for the coming year. The
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Fact Pattern: Armer Company is accumulating data to be used 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 that linear regression be employed to derive an equation in the form of y = a + bx for maintenance costs. Data regarding the maintenance hours and costs for last year and the results of the regression analysis are as follows: Average cost per hour (43,200 = 4,800) = $9 a coefficient 684.65 b coefficient 7.2884 Standard error of the a coefficient 49.515 Standard error of the b coefficient .12126 Standard error of the estimate 34.469 r2 .99724 t-value a 13.827 t-value b 60.105 Single-Tailed Values of t Degrees of Freedom .01 t 100 1.40 t.05 1.86 t.025 2.31 8 2.90 Hours of Activity 480 320 400 300 500 320 520 490 470 350 340 4,800 400 January February March April May July August September October November December Sum Average Maintenance Costs $ 4,200 3,000 3,600 2,820 4,350 3,030 4,470 4,260 4,050 3,300 3,160 $43,200 3,600 9 138 1.37 10 1 1.83 1.81 1.80 2.26 2.23 2.20 11 136 1.36 2.82 2.76 2.72 2.68 2.65 2.62 12 1.78 2.18 13 1.35 1.77 2.16 14 .35 1.76 2.15 The percentage of the total variance that can be explained by the regression equation is A. 69.613% B. 12.126% C. 99.724% D. 99.862%Step by Step Solution
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