Speedy Copy Centre operates a chain of photocopy centres near several major universities. The firm’s accountant is accumulating data to be used in preparing its annual budget for the coming year. The cost behaviour pattern of the firm’s equipment maintenance costs must be determined. Data regarding number of photocopies, maintenance hours and costs for last year are as follow:
Required:
1. Use Excel* and multiple regression analysis to estimate the behaviour of Speedy Copy Centre’s maintenance costs.
2. Calculate R2 and interpret this statistic.
3. Calculate the total variable cost and the fixed cost per maintenance hour at 1500 hours of maintenance and 255,000 photocopies. Explain the problems that might occur when using fixed cost per hour in decisions.
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