Santana Company is a small manufacturer and retailer of guitars. The company produces wooden guitars that are made inhouse and sold exclusively instore. These guitars were originally handmade, but over the years, production of guitars has slowly been automated as automation produced guitars with consistent quality. As of no more wooden guitars were handmade by Santana Company.

Brenda Wellington, the assistant manager, is in the process of working out a cost formula for overhead expenses. She assumes that in some way, overhead expense is related to sals either in units or in dollars.

She has collected data for sales and overhead expenses for January through December During her collection of the data for the last two years, she has established that the overhead expenses in February was exceptionally low as there was an electrical fire that year that caused widespread damage.

Data for Question One is on the next page

REQUIRED:

This question must be completed using EXCEL.

A Assist Brenda in developing the regressions for supplies expenses under normal circumstances, for sales both in units and in dollars Hint: Do not attempt a multiple regression.

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B Explain what you did in part A ie why did you do it the way you did it

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C Evaluate both regressions and determine which regression would be more appropriate.

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Total: marks