Question: 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
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 Jan. Apr. Maintenance Machine Month Cost Hours $ 4,550 620 Feb 3,350 460 Mar. 3,950 5-10 3,170 440 May 4,700 6.00 June 3,310 450 July 3,380 460 Aug 4,820 680 sept. 4,510 630 oct. 4,400 610 NOV 3,650 490 Dec 3510 450 Sun $47.400 6,500 Average $ 3,050 542 Average cost per hour $ 7.00 a (intercept) $129.77 (coefficient) 7.0527 Standard error of the estimate 52.847 R-squared 0.9935 t-value for D 39.130 The coefficient of determination for Armer's regression equation for the maintenance activities is
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