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Armer Company is accumulating data to use in preparing its annual profit plan for the...

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Accounting

Armer Company is accumulating data to use 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 the use of linear regression to derive an equation for maintenance hours and costs. Data regarding the maintenance hours and costs for the last year and the results of the regression analysis follow:

Month Maintenance Cost Machine Hours
Jan. $ 4,200 480
Feb. 3,000 320
Mar. 3,600 400
Apr. 2,820 300
May 4,350 500
June 2,960 310
July 3,030 320
Aug. 4,470 520
Sept. 4,260 490
Oct. 4,050 470
Nov. 3,300 350
Dec. 3,160 340
Sum $ 43,200 4,800
Average $ 3,600 $ 400
Average cost per hour $ 9.00
a (intercept) $ 684.65
b (coefficient) 7.2884
Standard error of the estimate 34.469
R-squared 0.99724
t-value for b 60.105

The coefficient of determination for Armer's regression equation for the maintenance activities is

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