Refer to the Broadway Floral data in E6-28A. Use Microsoft Excel to do the following:

Requirements:

1. Run a regression analysis.
2. Determine the company’s cost equation (use the output from the Excel regression).
3. Determine the R-squared (use the output from the Excel regression). What does Broadway Floral’s R-squared indicate?
4. Predict van operating costs at a volume of 16,500 miles assuming the company would use the cost equation from the Excel regression regardless of its R-squared.
Should the company rely on this cost estimate? Why or why not?

Data From E6-28A:-

Melody Leigh, owner of Broadway Floral, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Leigh wants to set the delivery fee based on the distance driven to deliver the flowers. Leigh wants to separate the fixed and variable portions of the van’s operating costs to get a better idea of how delivery distance affects these costs. Here are the data from the past seven months:

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Month Miles Driven Van Operating Costs January. February 15,500 $5,390 17,400 $5,280 March 15,400 $4,960 April. 16,300 $5,340 May. 16,500 $5,450 June. 15,200 $5,230 July 14,400 $4,680