Cost Estimation: Least squares method

A company reported the following data for its most recent twelve-month period.

Mont Machine Maintenance x2 xy y2

h Hours cost (y)
(x) R
Jan 90 1 500 8 100 135 000 2 250 000
Feb 150 1 950 22 500 292 500 3 802 500
Mar 60 900 3 600 54 000 810 000
Apr 30 900 900 27 000 810 000
May 180 2 700 32 400 486 000 7 290 000
Jun 150 2 250 22 500 337 500 5 062 500
Jul 120 1 950 14 400 234 000 3 802 500
Aug 180 2 100 32 400 378 000 4 410 000
Sep 90 1 350 8 100 121 500 1 822 000
Oct 30 1 050 900 31 500 1 102 500
Nov 120 1 800 14 400 216 000 3 240 000
Dec 60 1 350 3 600 81 000 1 822 500

Total 1 260 19 800 163 800 2 394 000 36 225 000

Additional information:

b = (n) (sumxy) – (sumx)(sumy)

(n) (sumx2) – (sumx)2

a = (sumy) – m (sumx)
n

Required
a. Using the least squares method, develop a cost estimation equation in the form
y = mx + c
b. You are told that r = 0.941. Explain what this means.
c. Calculate the coefficient of determination. Explain what the coefficient of
determination measures.