The ABC Company believes that R & M cost is a semi-variable cost that needs to be split into separate fixed R & M cost and variable R & M cost using simple regression analysis. They also believe that the variable R & M cost is a function of machine hours.

The ABC Company collected data from the accounting records for the first 8 months of 2016 which appears below:

Month	MH (x)	R & M Cost (y)
1	1,520	$36,375
2	1,250	38,000
3	1,750	41,750
4	1,600	42,360
5	2,350	55,080
6	2,100	48,100
7	3,000	59,000
8	2,750	56,800

Required:

Use the Regression Analysis excel add-in and print out your result.

Use the scatter diagram function (under insert) to find the line of regression and R. Print out the chart.

On your worksheet, type-in answers to the following 3 questions:

What is the simple regression equation?

What is the R and what does it show?

What is the forecasted total R & M cost for month 9 if 4,000 MH are predicted?