The McGraw Company is accumulating data to be used in preparing its annual profit plan for...

  

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The McGraw 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: (CMA adapted) January February March April May June July August September October November December Sum Average Hours of Activity 470 540 690 500 840 550 540 880 820 790 600 580 7,800 650 Maintenance Costs 4,460 3,260 3,860 3,080 $ 4,610 3,220 3,290 4,730 4,520 4,310 3,560 3,420 $ 46,320 3,860 January February March April May June July August September October November December Sum Average A coefficient B coefficient Standard error of the a coefficient Standard error of the b coefficient Standard error of the estimate R2 T-value a T-value b Hours of Activity 470 540 690 500 840 550 540 880 820 790 600 580 7,800 650 584.110 0.87845 What would be the cost equation if the high-low method is used? Maintenance Costs $ 4,460 3,260 3,860 3,080 4,610 3,220 3,290 4,730 4,520 4,310 3,560 3,420 $ 46,320 3,860 1,748.60 3.2483 426.389 0.57758 2.994 3.698 The McGraw 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: (CMA adapted) January February March April May June July August September October November December Sum Average Hours of Activity 470 540 690 500 840 550 540 880 820 790 600 580 7,800 650 Maintenance Costs 4,460 3,260 3,860 3,080 $ 4,610 3,220 3,290 4,730 4,520 4,310 3,560 3,420 $ 46,320 3,860 January February March April May June July August September October November December Sum Average A coefficient B coefficient Standard error of the a coefficient Standard error of the b coefficient Standard error of the estimate R2 T-value a T-value b Hours of Activity 470 540 690 500 840 550 540 880 820 790 600 580 7,800 650 584.110 0.87845 What would be the cost equation if the high-low method is used? Maintenance Costs $ 4,460 3,260 3,860 3,080 4,610 3,220 3,290 4,730 4,520 4,310 3,560 3,420 $ 46,320 3,860 1,748.60 3.2483 426.389 0.57758 2.994 3.698

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To calculate the cost equation using the highlow method you need to find the variable cost per hour ... View the full answer