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	440	$ 3,900
February	320	2,500
March	370	3,000
April	350	2,900
May	550	4,330
June	330	2,710
July	340	3,520
August	470	4,770
September	520	4,230
October	520	4,460
November	380	3,200
December	380	3,550
Sum	4,970	43,070
Average	414	3,589

A coefficient		246.88
B coefficient		8.0699
Standard error of the a coefficient	556.244
Standard error of the a coefficient	1.31938
Standard error of the estimate		360.101
R^2		0.78908
T-value a		.444
T-value b		6.116

What is the variable cost per hour using the high-low method to estimate the cost equation?

Answer rating: 100% (QA)

The HighLow method uses the highest and lowest levels of activity to estimate the fixed and variab... View the full answer