SuperReb Products, Inc., a discount store, has gathered data on its overhead activities and associated costs for the past 12 months. Hey Reb, a member of the CFOs office, believes that overhead activities and costs should be classified into groups that have the same driver. Hey has decided that unloading incoming goods, counting goods, and inspecting goods can be grouped together as a more general receiving activity, since these three activities are all driven by the number of purchase orders. The following 12 months of data have been gathered for the receiving activity:

Month: Purchase Orders & Receiving Cost

Month: Purchase Orders & Receiving Cost

1: 1,423 $25,693

2: 2,456 $36,455

3: 1,044 $21,070

4: 2,323 $35,090

5: 1,975 $20,596

6: 1,290 $25,696

7: 1,238 $25,400

8: 2,110 $29,562

9: 2,557 $38,956

10: 2,780 $40,125

11: 1,943 $31,000

12: 2,855 $50,632

1) Using the method of least squares, what is the cost formula using the data above for the receiving activity?

2) Explain what the R Square value in the output above means: