The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below:

The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below:

	Machine-Hours			Repair Costs
April	2,140			$	33,094
May	2,169			$	33,112
June	2,126			$	33,089
July	2,198			$	33,112
August	2,111			$	33,022
September	2,214			$	33,176
October	2,137			$	33,063
November	2,209			$	33,149

Management believes that repair cost is a mixed cost that depends on the number of machine-hours. Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to:

Multiple Choice

• 15.10 per machine-hour plus $33,700 per month
• $0.81 per machine-hour plus $31,736 per month
• $1.35 per machine-hour plus $30,170 per month
• $1.08 per machine-hour plus $30,761 per month

  Correct

Explanation

Using Microsoft Excel, the solution is:

Intercept	$	30,761		Fixed cost
Slope	$	1.08		Variable cost
R2		0.82