Question: Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and
Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last years operations (revenues and costs in thousands of dollars).
| Store | Revenues | Costs |
| 101 | $4,290 | $4,499 |
| 102 | 2,417 | 3,274 |
| 103 | 6,023 | 5,466 |
| 104 | 4,362 | 4,473 |
| 105 | 3,199 | 4,246 |
| 106 | 4,403 | 3,984 |
| 107 | 7,084 | 5,314 |
| 108 | 2,064 | 3,324 |
| 109 | 6,366 | 5,448 |
| 110 | 3,798 | 3,529 |
| 111 | 4,266 | 4,654 |
| 112 | 5,165 | 3,580 |
| 113 | 3,742 | 3,126 |
| 114 | 5,577 | 5,035 |
| 115 | 3,074 | 3,271 |
Simple regression results from the data of Davis Stores are as follows.
| Equation: | |
| Store costs = $2,091.4 + (Revenue 48.4%) | |
| Statistical data | |
| Correlation coefficient | 0.826 |
| R2 | 0.682 |
|
| |
Required:
a. Estimate store costs for a store with revenue of $4.4 million.
b. What percentage of the variation in store costs is explained by the independent variable?
Can you show me a break down, i cant understand this.
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