# Question: Anna Schaub the financial manager at the Mangiamo restaurant is

Anna Schaub, the financial manager at the Mangiamo restaurant, is checking to see if there is any relationship between newspaper advertising and sales revenues at the restaurant. She obtains the following data for the past 10 months:

.:.

She estimates the following regression equation:

Monthly revenues = $ 46,443 + ($ 6.584 * Advertising costs)

1. Plot the relationship between advertising costs and revenues. Also draw the regression line and evaluate it using the criteria of economic plausibility, goodness of fit, and slope of the regression line.

2. Use the high-low method to compute the function relating advertising costs and revenues.

3. Using

(a) The regression equation

(b) The high-low equation, what is the increase in revenues for each $ 1,000 spent on advertising within the relevant range? Which method should Schaub use to predict the effect of advertising costs on revenues? Explain briefly.

.:.

She estimates the following regression equation:

Monthly revenues = $ 46,443 + ($ 6.584 * Advertising costs)

1. Plot the relationship between advertising costs and revenues. Also draw the regression line and evaluate it using the criteria of economic plausibility, goodness of fit, and slope of the regression line.

2. Use the high-low method to compute the function relating advertising costs and revenues.

3. Using

(a) The regression equation

(b) The high-low equation, what is the increase in revenues for each $ 1,000 spent on advertising within the relevant range? Which method should Schaub use to predict the effect of advertising costs on revenues? Explain briefly.

## Relevant Questions

Parker manufacturing has been using activity-based costing to determine the cost of product X-678. One of the activities, “Inspection,” occurs just before the product is finished. Fitzgerald inspects every 10th unit and ...After further discussion, Julie and Rhett wonder if they should view both the number of procedures and number of patient-hours as cost drivers in a multiple regression estimation in order to best understand Apollo’s ...1. The Dalton Company manufactures slippers and sells them at $ 12 a pair. Variable manufacturing cost is $ 5.00 a pair, and allocated fixed manufacturing cost is $ 1.25 a pair. It has enough idle capacity available to ...Slugger Corporation produces baseball bats for kids that it sells for $ 36 each. At capacity, the company can produce 50,000 bats a year. The costs of producing and selling 50,000 bats are as follows:Required1. Suppose ...Gormley Precision Tools makes cutting tools for metalworking operations. It makes two types of tools: A6, a regular cutting tool, and EX4, a high-precision cutting tool. A6 is manufactured on a regular machine, but EX4 must ...Post your question