Hammer 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
January	$ 4,700	680
February	3,500	520
March	4,100	600
April	3,320	500
May	4,850	700
June	3,460	510
July	3,530	520
August	4,970	760
September	4,760	690
October	4,550	670
November	3,800	550
December	3,660	540
Sum	$ 49,200	7,240
Average	$ 4,100	$ 603
Average cost per hour	$ 7.00
a (intercept)	$ 3.8600
b (coefficient)	6.7892
Standard error of the estimate	83.4170
R-squared	0.9838
t-value for b	24.6685

1. If Hammer Company uses the high-low method of analysis, the equation for the relationship between hours of activity and maintenance cost follows:(Do not round intermediate calculations. Round your final x variable to one decimal place.)

rev: 06_28_2021_QC_CS-268689

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Multiple Choice

• y = 603 + 7.0x
• None of these answer choices are correct.
• y= 147 + 7.8x
• y= 147 + 6.3x
• y= 4,100 + 603.0x

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2. The percent of the total variance that can be explained by the regression equation is _______________.