Refer to the data in 3-7.

Required:

1. Compute the cost formula for tanning services using the method of least squares.

2. Using the formula computed in Requirement 1, what is the predicted cost of tanning services for September for 2,500 appointments?

3. What does the coefficient of determination tell you about the cost formula computed in Requirement 1? What are the t statistics for the number of appointments and the in¬

tercept term? What do these statistics tell you about the choice of number of appoint¬

ments as the independent variable and the probability that there are fixed costs?