Leslie Sporting Goods is a locally owned store that specializes in printing team jerseys. The majority of
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Question:
Leslie Sporting Goods is a locally owned store that specializes in printing team jerseys. The majority of its business comes from orders for various local teams and organizations. While Leslies prints everything from bowling team jerseys to fraternity or sorority apparel to special event shirts, summer league baseball and softball team jerseys are the companys biggest source of revenue.
Leslies manager is trying to determine if number of orders or the number of jerseys printed or both is the driver of operating costs. Data for the past year are summarized below:
Month Number of Orders Number of Jerseys Operating Cost
January $
February
March
April
May
June
July
August
September
October
November
December
Next month, the company expects to print jerseys and process orders.
Required:
Run a simple regression with operating cost as the Y variable and number of orders as the X variable. Answer the following questions:
What is the estimate of total fixed cost?
What is the estimate of variable cost per order?
Use the cost equation with the rounded values to estimate next months total operating cost.
Provide an interpretation of the Rsquared value.
How much of the variation in total operating cost is unexplained?
Run a simple regression with operating cost as the Y variable and number of jerseys as the X variable. Answer the following questions:
What is the estimate of total fixed cost?
What is the estimate of variable cost per jersey?
Use the cost equation with the rounded values to estimate next months total operating cost.
Provide an interpretation of the Rsquared value.
How much of the variation in total operating cost is unexplained?
Run a multiple regression with operating cost as the Y variable and number of orders X and number of jerseys X Answer the following questions:
What is the estimate of total fixed cost?
What is the estimate of variable cost per order?
What is the estimate of variable cost per jersey?
Use the cost equation with the rounded values to estimate next months total operating cost.
Provide an interpretation of the adjusted Rsquared value.
How much of the variation in total operating cost is unexplained?
Which variables would you recommend Leslies managers use to estimate total operating cost?
Related Book For
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
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