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 hassuggested 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 regressionanalysis follow:MaintenanceMachineMonthCostHours$ 4,200Jan.480Feb.3,000320Mar.3,600400Apr.2,820300May4,350500June2,960310July3,030320Aug.4,470520Sept.4,260490Oct.4,050470Nov.3,300350Dec.3,160340Sum$43, 2004,800$ 3,600$$$ 684.65Average400Average cost per houra (intercept)b (coefficient)9.007.2884Standard error of the estimate34.469R-squared0.99724t-value for b60.105At 400 hours of activity, Armer management can be approximately two-thirds confident that themaintenance costs will be in the range of

Working: Projected cost at 400 hours of activity [400 *7.2884+684.65] 3,600.01 Given, Standard…

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: Maintenance Machine Month Cost Hours $ 4,200 480 Jan. Feb. 3,000 320 Mar. 3,600 400 Apr. 2,820 300 500 4,350 2,960 May June 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 $ 3,600 Average Average cost per hour a (intercept) b (coefficient) 24 $ $ 684.65 400 9.00 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

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: Maintenance Machine Month Cost Hours $ 4,200 480 Jan. Feb. 3,000 320 Mar. 3,600 400 Apr. 2,820 300 500 4,350 2,960 May June 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 $ 3,600 Average Average cost per hour a (intercept) b (coefficient) 24 $ $ 684.65 400 9.00 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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