The ACE is situated by the harbour in the historic town of Smallville. The ACE is a

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Question:

The ACE is situated by the harbour in the historic town of Smallville. The ACE is a family run pub providing bed and breakfast accommodation and delicious home-made bar meals. Sarah Essen, marketing manager, needs to investigate the company advertising expenditure and its sales revenue. Sarah believes that the company sales revenue depends on the advertising expenditure as many small companies run advertising to support the selling function. The data of advertising expenditure and weekly sales from last year has been collected and entered on the worksheet entitled ACE.

(a) State, giving a brief explanation, which variable would be the dependent variable and which variable would be independent variable.

(b) Draw a scatter plot of this data on graph paper and comment on the association between ‘Advertising Expenditure’ and ‘Weekly Sales’ as indicated by the scatter plot.

(c) Calculate average of ‘Advertising Expenditure’ and ‘Weekly Sales’, the Correlation coefficient (R) and Coefficient of Determination (R2) for this data. What does the value of your coefficient tell you about the association between the two variables?

(d) State the regression equation for this task.

(e) Using the equation that you achieved from above estimate the sale revenue if (i) the advertising expenditure were £1,000

(ii) the advertising expenditure were £1,500

i) Draw conclusions from the results that you achieved from the questions above. Your answers should include

(i) The purpose of regression analysis.

(ii) The results of your analysis for each question.

(iii) The interpretation of your results/methods including any suggestions where appropriate. Your interpretation should include the interpretation of correlation between two variables including the strength, direction, and an explanation of the effect.

(iv)Conclusion – a summary of what you have achieved.