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Landis Company uses a job$-$order costing system with a predetermined plantwide overhead rate based on direct labor$-$hours. In an effort to improve its ability to measure job profitability and make decisions, the company is considering allocating some of its overhead costs, such as electrical costs, based on machine$-$hours instead of direct labor$-$hours. To further explore the potential benefits of this approach, the company has gathered the following eight weeks of actual $($not estimated$)$ data with respect to its electrical costs:

Machine$-$Hours Direct Labor$-$Hours Electrical Costs

Week $17,7008,910$ $ $76,200$

Week $28,9008,92083,800$

Week $38,6008,87081,000$

Week $48,1008,84080,800$

Week $57,6008,99079,400$

Week $67,1008,94070,700$

Week $75,5008,87061,500$

Week $86,8008,91073,900$

Total $60,30071,250$ $ $607,300$

Using the data above, the company translated these actual amounts into annual estimates as follows:

Machine$-$Hours Direct Labor$-$Hours Electrical Costs

Total for eight weeks $($a$)60,30071,250$ $ $607,300$

$52$ weeks $-$: $8$ weeks $($b$)6\mathrm{.}56\mathrm{.}56\mathrm{.}5$

Annual estimate $($a$)\backslash$times $($b$)391,950463,125$ $ $3,947,450$

Click here to download the Excel template, which you will use to answer Requirements $4.5$ and $6.$

Click here for a brief tutorial on Regression Analysis in Excel.

$5.$ Refer to the eight weeks of actual data included in the Excel template.

Use least$-$squares regression to estimate the fixed electrical cost per week and the variable electrical cost per machine$-$hour. $($You can refer to Appendix $5$A of the text for a brief illustration of the method being used to perform the regression computations.$)$

What is the R$2$ for the regression line in requirement $5$a$?$

What does the R$2$ tell us$?$