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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 $60.105$

At $400$ hours of activity, Armer management can be approximately two $-$ thirds confident that the maintenance costs will be in the range of

Multiple Choice

$ $3, 551.37$ to $ $3, 648.51 .$

$ $3, 565.54$ to $ $3, 634.48 .$

$ $3, 550.50$ to $ $3, 649.53 .$

$ $3, 586.18$ to $ $3, 613.93 .$

None of these answer choices are correct.

Answer & Explanation Solved by verified expert

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