Pine View Hospital wants to determine the cost behavior pattern of maintenance costs for its X-ray machines. The hospital has decided to use linear regression to examine the costs. The prior year’s data regarding maintenance hours and costs are as follows:

Required
A. Perform a regression analysis on the above data. What maintenance costs should be budgeted for a month in which 430 maintenance hours will be worked?
B. What is the percentage of the total variance that can be explained by your analysis?
C. Use the high/low method to estimate a cost formula for Pine View. How similar is your high/low solution to the regressionsolution?

Transcribed Image Text:

January February March April May une July August September October November December Hours of Activity 500 450 300 375 425 520 410 380 440 390 400 330 Maintenance Costs $3,950 3,800 3,220 3,380 3,700 4,000 3,650 3,400 3,780 3,470 3,590 3,310