Question

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.	$	4,550			620
Feb.		3,350			460
Mar.		3,950			540
Apr.		3,170			440
May		4,700			640
June		3,310			450
July		3,380			460
Aug.		4,820			680
Sept.		4,610			630
Oct.		4,400			610
Nov.		3,650			490
Dec.		3,510			480
Sum	$	47,400			6,500
Average	$	3,950		$	542
Average cost per hour				$	7.00
a (intercept)				$	129.7693
b (coefficient)					7.0527
Standard error of the estimate					52.8466
R-squared					0.9935
t-value for b					39.130

The percent of the total variance that can be explained by the regression equation is

Answer 1

Answer = 99.35%

Explanation:

The coefficient of Determination or R-squared is the measure of the percent of the total variance that can be explained by the regression equation so r - squared is 0.9935 which gives are answer 99.35%