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.	$	4,750			460
Feb.		3,550			310
Mar.		4,150			400
Apr.		3,370			310
May		4,900			550
June		3,510			290
July		3,580			350
Aug.		5,020			540
Sept.		4,810			440
Oct.		4,600			520
Nov.		3,850			340
Dec.		3,710			340
Sum	$	49,800			4,850
Average	$	4,150		$	404
Average cost per hour				$	10.00
a (intercept)				$	1,638.68
b (coefficient)					6.2136
Standard error of the estimate					215.1189
R-squared					0.8925
t-value for b					39.130

Based on the data derived from the regression analysis, 420 maintenance hours in a month mean that maintenance costs should be budgeted to the nearest dollar at

Multiple Choice

• $4,463.

• $3,014.

• $4,480.

• $4,248.

• None of these answer choices are correct.