PLEASE SHOW YOUR WORK

The Armer Company is accumulating data to be used 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 that linear regression be employed to derive an equation in the form of y = a + bx for maintenance costs. Data regarding the maintenance hours and costs for last year and the results of the regression analysis are as follows:

	Hours of Activity		Maintenance Costs
January	530		$ 4,300
February	350		3,500
March	410		3,900
April	310		2,600
May	460		4,370
June	320		3,180
July	300		3,280
August	460		4,680
September	460		4,620
October	500		4,270
November	310		3,300
December	370		3,270
Sum	4,780		45,270
Average	398		3,773

A coefficient			888.14
B coefficient			7.2411
Standard error of the a cofficient	493.814
Standard error of the a cofficient	1.21636
Standard error of the estimate			330.364
R2			0.77992
T-value a			1.799
T-value b			5.953

What would be the cost equation if regression analysis is used?

A. Maintenance Costs = 888.14 + 7.2411