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Midgett Co. has accumulated data to use in preparing its annual profit plan for the...

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Accounting

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Midgett Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. The accounting staff suggested that linear regression be employed 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 are as follows: Maintenance Month Cost Jan. $ 5,020 Feb. 3,657 Mar. 4,400 Apr. 3,328 May 5,222 June 3,450 July 3,499 Aug. 5,368 Sept. 5,126 Oot. 4,849 Nov. 3,935 Dee. 3.990 Sum $ 51,844 Averago $4.320.33 Machine Hours 590 450 590 340 610 470 430 680 690 540 469 500 6,350 529.17 Average cost per hour (551,844/6,350) - 58.16 rounded to the nearest cent) = 0.92153 2=0.84922 The percent of the total variance that can be explained by the regression equation is: Multiple Choice 84.963% 54.812% 66.191% 84.922%. 84.784%

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