Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / The Armer Company is accumulating data to be used in preparing its annual profit plan for ...

The Armer Company is accumulating data to be used in preparing its annual profit plan for the coming year The cost behavior pattern of the maintenance costs must be determined

The Armer Company is accumulating data to be used in preparing its annual profit plan for the coming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff has suggested that linear regression be employed to derive an equation in the form of y = a + bx for maintenance costs. Data regarding the maintenance hours and costs for last year and the results of the regression analysis are as follows:

     

  Hours of Activity   Maintenance Costs
  January 510                $ 4,200             
  February 300                2,900             
  March 410                3,700             
  April 290                2,960             
  May 510                4,330             
  June 300                2,920             
  July 300                3,010             
  August 530                4,630             
  September 480                4,100             
  October 480                3,940             
  November 340                3,200             
  December 360                3,280             
       
  Sum 4,810                43,170             
  Average 401                3,598             

     

  A coefficient     1,014.92     
  B coefficient     6.4430     
  Standard error of the a cofficient 127.220            
  Standard error of the a cofficient 0.30937            
  Standard error of the estimate     98.460     
  R2     0.97746     
  T-value a     7.978     
  T-value b     20.826     

    

Using the high-low method to estimate cost behavior, 410 maintenance hours in a month would mean the maintenance costs would be budgeted at: (Round your intermediate calculations and final answer to 2 decimal places.)

  $3,902.00.
  $3,280.00.
  $3,598.00.
  $3,795.20.

Jun 19 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions