JK CPA & Advisors LLC audits DAC retail store in Fort Lauderdale. For the pandemic period, the store developed online order system. To examine the going concern issue, the auditor wants to get the evidence that the store's online sales are profitable. Using the data collected during the pandemic period, the auditor run the regression analysis, and found the following results. The dependent variable is the store's net profit from online sales (after deducting all related costs to online sales) and the independent variable (X1 and X2) are the number of items sold by online (X1) and the amount of online sales (X2). The following is the regression output in excel: df SS MS F Significance F Regression 1 25.06432 25.06432 2279.336 1.2641E-285 Residual 1269 13.95434 0.010996 Total 1270 39.01865 Coefficients Standard Error t Stat P-value Intercept -0.57417365 0.023762418 -24.1631 2E-106 X variable 1 -0.003 0.1065 -0.53 0.540 X Variable 2 0.001059838 2.21991E-05 47.74239 1.3E-285 

Questions: Please answer using the statistical evidences. 

1. Do you think that the net profit from online sales can be explained by the number of items sold by online and the amount of online sales ? Is this model well working to explain those relations?

 2. Which one is more important and meaningful to increase the net profit, the number of items or the amount of online sales? Why? 

3. Now the store wants to sell 5000 items online and expects that the online sales be 50,000. What would be the expected net profit? Please show your calculations. 

4. Can you suggest any other independent variable(s) besides X1 and X2 to improve R-square? Which variables could be? Why? or Why not?

Answer rating: 100% (QA)

1 To determine if the net profit from online sales can be explained by the number of items sold online and the amount of online sales we can examine the regression output The Fstatistic for the regres... View the full answer