QUESTION 17

1. Burmer Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows:

   Month	Maintenance Cost				Machine Hours
   Jan.	$	5,040			620
   Feb.		3,600			420
   Mar.		4,320			520
   Apr.		3,380			390
   May		5,220			650
   June		3,550			400
   July		3,640			430
   Aug.		5,360			680
   Sept.		5,110			640
   Oct.		4,860			610
   Nov.		3,960			460
   Dec.		3,790			440
   Sum	$	51,830			6,260
   Average	$	4,319			522

   A staff assistant has run regression analyses on the data and obtained the following output using Excel: REGRESSION ANALYSIS Y (Dependent) Variable: Maintenance Cost X (Independent) Variable: Maintenance Hours

   Regression Statistics
   Multiple R	0.998210294
   R Square	0.996423791
   Adjusted R Square	0.99606617
   Standard Error	47.0629563
   Observations	12
   ANOVA
   	df		SS		MS		F		Significance F
   Regression	1		6171342.448		6171342		2786.257		1.44166E-13
   Residual	10		22149.21856		2214.922
   Total	11		6193491.667
   	Coefficients		Standard Error		t Stat		P-value		Lower 95%		Upper 95%
   Intercept	783.7782188		68.34114772		11.46861		4.47E-07		631.504653		936.051785
   Hours	6.777102456		0.12839066		52.78501		1.44E-13		6.491030239		7.06317467

   Using regression analysis, what is the estimated maintenance expense for a month that the firm expects to operate 600 machine hours (round to nearest whole dollar)?

   		$88.
   		$4,850.
   		$4,050.
   		$6,934.