Armer Company is accumulating data to use 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 the use of linear regression 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 follow: MonthMaintenance CostMachine HoursJan.$4,200 480 Feb. 3,000 320 Mar. 3,600 400 Apr. 2,820 300 May 4,350 500 June 2,960 310 July 3,030 320 Aug. 4,470 520 Sept. 4,260 490 Oct. 4,050 470 Nov. 3,300 350 Dec. 3,160 340 Sum$43,200 4,800 Average$3,600 $400 Average cost per hour $9.00 a (intercept) $684.65 b (coefficient) 7.2884 Standard error of the estimate 34.469 R-squared 0.99724 t-value for b 60.105 At 400 hours of activity, Armer management can be approximately two-thirds confident that the maintenance costs will be in the range of

The intercept value is 684.65 and the slope value is 7.2884.

Answered: Armer Company is accumulating data to…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Armer Company is accumulating data to use 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 the use of linear regression 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 follow:

Month	Maintenance Cost	Machine Hours
Jan.	$	4,200			480
Feb.		3,000			320
Mar.		3,600			400
Apr.		2,820			300
May		4,350			500
June		2,960			310
July		3,030			320
Aug.		4,470			520
Sept.		4,260			490
Oct.		4,050			470
Nov.		3,300			350
Dec.		3,160			340
Sum	$	43,200			4,800
Average	$	3,600		$	400
Average cost per hour		$	9.00
a (intercept)		$	684.65
b (coefficient)			7.2884
Standard error of the estimate			34.469
R-squared			0.99724
t-value for b			60.105