The controller of Standard Industries has collected the following monthly expense data for analyzing the cost behavior of electricity costs.

	Total Total Electricity	Costs Machine Hours
January	$2,500	300
February	3,000	350
March	3,600	500
April	4,500	690
May	3,200	400
June	4,900	700
July	4,100	650
August	3,800	520
September	5,100	680
October	4,200	630
November	3,300	350
December	6,100	720

Instructions

(a)

Determine the fixed- and variable-cost components using regression analysis (We recommend the use of Excel.)

(b)

Prepare a scatter plot using Excel. Present the cost equation line estimated in part (a).

(c)

What electricity cost does the cost equation estimate for a level of activity of 500 machine hours? By what amount does this differ from March's observed cost for 500 machine hours?