What is the variable cost per hour using the high-low

Reference no: EM13587838

The Armer Company is accumulating data to be used 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 that linear regression be employed to derive an equation in the form of y = a + bx for maintenance costs. Data regarding the maintenance hours and costs for last year and the results of the regression analysis are as follows:

	Hours of Activity	Maintenance Costs
January	520	$ 4,400
February	310	2,500
March	360	3,800
April	330	2,820
May	550	4,280
June	320	3,220
July	330	3,240
August	520	4,180
September	500	4,320
October	510	4,250
November	350	3,600
December	320	3,220

Sum	4,920	43,830
Average	410	3,653

A coefficient		1,213.96
B coefficient		5.9477
Standard error of the a cofficient	372.412
Standard error of the a cofficient	0.88515
Standard error of the estimate		289.540
R²		0.81868
T-value a		3.260
T-value b		6.719

What is the variable cost per hour using the high-low method to estimate the cost equation? (Round your final answer to 2 decimal places.)

Reference no: EM13587838

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