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ii Regression analysis

Learning Goal: I'm working on a management discussion question and need the explanation and answer to help me learn.

.

The maintenance cost incurred and the actual machine hours worked during the months of January, February, March, and April 2003 were as follows:

Month

Machine hours in

Production departments

Maintenance

departments Costs

Sh.

January

800

350

February

1,200

350

March

400

150

April

1,600

550

Required:

  • Determine the cost estimation function using:
    • High-low method.(2 marks)
    • Regression analysis(2marks)
  • Using the regression function estimate:
  • The maintenance costs that would have been incurred if the machine hours were expected to be 900 in the month of May 2003.(1 mark)

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