The Hard Rock Mining Company is developing cost formulas for management planning and decision- making purposes. The companys cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base with which the cost might be closely correlated. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information:

Quarter	Tons Mined	Direct Labor-Hours		Utilities Cost
Year 1:
First	15,000	5,000	$	50,000
Second	11,000	3,000	$	45,000
Third	21,000	4,000	$	60,000
Fourth	12,000	6,000	$	75,000
Year 2:
First	18,000	10,000	$	100,000
Second	25,000	9,000	$	105,000
Third	30,000	8,000	$	85,000
Fourth	28,000	11,000	$	120,000

Required:

1(a).

Using tons mined as the independent (X) variable, determine a cost formula for utilities cost using the least-squares regression method. Base your calculations on the data above for Year 1 and Year 2. (Round the "Variable cost per unit" to 2 decimal places.)

Y= + $ x

2.	Using direct labor-hours as the independent (X) variable, determine a cost formula for utilities cost using the least-squares regression method. Base your calculations on the data above for Year 1 and Year 2. (Round the "Variable cost" to 2 decimal places.) Y= + $ x