=+3-33 KK High–low method, regression analysis (CIMA, adapted) OBJECTIVES 4, 5 Anna Tan, the financial manager at the Red Dragon restaurant, is checking to see if there is any relationship between newspaper advertising and sales revenues at the restaurant. She obtains the following data for the past 10 months:

Month Revenues Advertising costs March $50 000 $2 000 April 70 000 3 000 May 55 000 1 500 June 65 000 3 500 July 55 000 1 000 August 65 000 2 000 September 45 000 1 500 October 80 000 4 000 November 55 000 2 500 December 60 000 2 500 She estimates the following regression equation:

Monthly revenues = $39 502 + ($8.723 × Advertising costs)

Required 1 Plot the relationship between advertising costs and revenues.