The maintenance costs of a college department are listed below. The Controller wishes to useservice hours as a cost driver for planning purposes.

MonthServiceHoursMaintenance Cost

Jan525$4,710

Feb5054,310

Mar3102,990

Apr4954,200

May3153,000

Jun4854,215

Jul3152,950

Aug4053,680

Sep4754,100

Oct3453,250

Nov3503,260

Dec3353,015

Totals4,860$43,680

Required:

1. Use the high/low method to determine the break down of the mixed costs. Express

the cost in the format Y=a + bxExplain each of the terms.

Use this formula to show the maintenance costs for a month in which there were450 service hours

2. A regression analysis was done on the above data, with the following results:

INTERCEPT = 655.92

SLOPE = 7.368

R²⁼0.983451

Use this information to show maintenance costs for the month with 450 servicehours. Explain the value of the R².

3. Explain the difference between the two results.

4.Which method would you use for planning purposes? Why? Why would you not use the other method?