Salter Manufacturing Company produces inventory in a highly automated assembly plant in Fall River, Massachusetts. The automated system is in its first year of operation and management is still unsure of the best way to estimate the overhead costs of operations for budgetary purposes. For the first six months of operations, the following data were collected:

Machine-hoursKilowatt-hoursTotal Overhead Costs

January4,5605,424,000$405,600

February4,3805,208,000404,160

March4,6805,400,000407,040

April3,9605,148,000404,160

May3,9005,040,000391,200

June3,7204,944,000384,000

Corise's Wild Game Company used least squares regression analysis to obtain the following output for the maintenance costs as dependent variable and Machine-hours as an independent variable for the month from February to June :

Regression Analysis output:

Constant17,540

Standard error of Y estimate819

R20.864

Number of observations5

Slope coefficient(s)2.36

Required:

a. Determine the cost function of the maintenance cost.

b. What is the expected maintenance cost if the company expects to use 4,000 machine hours in July.

c. Briefly explain which quantitative method is more accurate (High-Low method or Regression Analysis method.)

d. What is the coefficient of determination from the regression analysis? Comment on the goodness of fit of the maintenance cost function.