Determine the percentage of the total variance

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Reference no: EM134175

Question :

Wilkens Company wants to evaluate 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 provided 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

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

b. Determine the percentage of the total variance that will be explained by the regression equation?

Reference no: EM134175

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