The management of Digger Inc., is trying to develop a cost formula for its major manufacturing overhead activities. Digger$$s manufacturing process is highly automated and power costs are a significant manufacturing cost. Cost analysts have decided that power costs are mixed. The costs must be separated into their fixed and variable components so that the cost behavior of the power usage activity can be better understood. Analysts have determined that machine hours drive power usage; thus machine hours are the cost driver for power costs. Nine months of data have been collected and are presented in the chart below:

Period Machine

Hours Power Cost

January $36,000$ $$45,000$

February $45,000$ $$60,300$

March $54,000$ $$67,500$

April $39,600$ $$53,064$

May $37,800$ $$47,250$

June $32,400$ $$43,416$

July $43,200$ $$54,000$

August $50,400$ $$67,536$

September $46,800$ $$58,500$

Note: For the following requirements, round the variable cost per unit to the nearest cent and the total fixed cost to the nearest dollar.

Required

a$.$ Use the high and low points to estimate a power cost formula. B$)$ use the method of least squares regression in excel to estimate a power formula. C$)$ evaluate r from requirement b$.$ are machines hours a good predictor of power costs? D$)$using the cost formula from requirement b$,$ estimate power costs when $55,800$ machine hours are used.