Wilkens Company wants to determine the cost behavior pattern of maintenance costs. Wilkens has decided to use linear regression by employing the equation y = a + bx for maintenance costs. The prior ye

Wilkens Company wants to determine the cost behavior pattern of maintenance costs. Wilkens has decided to use linear regression by employing the equation y = a + bx for maintenance costs. The prior year’s data regarding maintenance hours and costs, and the results of the regression analysis are given in the data below.

Hours of Activity Maintenance Costs

January 480 4,200

February 320 3,000

March 400 3,600

April 300 2,820

May 500 4,350

June 310 2,960

July 320 3,030

August 520 4,470

September 490 4,260

October 470 4,050

November 350 3,300

December 340 3,160

Total 4,800 $43,200

Average 400 $ 3,600

Average cost per hour $9.00

A 684.65

b 7.2884

Standard error of a 49.515

Standard error of b 0.12126

Standard error of the estimate 34.469

r 0.99724

“R-SQUARED” 0.99448

a. Refer to the Wilkens Company. Based upon the data derived from the regression analysis, what maintenance costs should be budgeted for a month in which 420 maintenance hours will be worked?

b. Refer to the Wilkens Company. What is the percentage of the total variance that can be explained by the regression equation?

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