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 Month Maintenance Cost Machine Hours Jan $5,040 620 Feb 3,648 420 Mar 4,320 520 Apr 3,331 390 May 5,221 650 June 3,550 400 July 3,655 430 Aug 5,365 690 Sept 5,110 640 Oct 4,866 610 Nov 3,944 460 Dec 3,790 440 Sum $51,840 6,270 Average $4,320 00 522 50 Average cost per hour ($51,840 divide 6,270) $8 27 (rounded to the nearest cent) r 99821 r 2 99780 Using the high low method, total monthly fixed cost is calculated to be (round to nearest dollar) $757 $687 $756 $733 $717

Question: 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

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:

Month	Maintenance Cost	Machine Hours
Jan.	$5,040	620
Feb.	3,648	420
Mar.	4,320	520
Apr.	3,331	390
May	5,221	650
June	3,550	400
July	3,655	430
Aug.	5,365	690
Sept.	5,110	640
Oct.	4,866	610
Nov.	3,944	460
Dec.	3,790	440
Sum	$51,840	6,270
Average	$4,320.00	522.50

Average cost per hour ($51,840 ÷ 6,270) = $8.27 (rounded to the nearest cent)
r = .99821
r² = .99780
Using the high-low method, total monthly fixed cost is calculated to be (round to nearest dollar):

$757.

$687.

$756.

$733.

$717.

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