19 Normal Heading No Spaci... Heading 1 Paragraph Styles sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $236,250. Question #2 Erica, Inc, makes student book bags that sell for $20 each. For the coming year, management expects fixed costs to be $225,000. Variable costs are $14 per unit. Instructions (a) Compute break-even sales in dollars using the mathematical equation. (b) Compute break-even sales using the contribution margin ratio. (c) Compute margin of safety ratio assuming actual sales are $937,500 (d) Compute the sales required to earn net income of $150,000, using the mathematical equation Suppose you are interested in predicting wages based on various features of the individuals in the excel file Wage.xls The definition of the variables of interest is presented in the table below: Variable Definition / Unit Inwage Natural logarithm of wage education Number of years of education exper Years of experience Consider the following model: Inwage = Bo + Beducation, + B experi+u a. Estimate the parameters of this model and write down the equation (3 marks) b. Interpret the parameters estimated in the regression equation (2 marks) Are the coefficients statistically significant? (3 marks) *Hint: Conduct proper hypothesis testing. (2 marks) d. How well does the estimated regression equation fit the data? Hint: Explain the R-square e. How much do you predict the individual's wage to be ifhe she has finished 20 years of education and 2 has 25 years of experience? marks) C f. Write down the null and the alternative hypothesis to test the homoscedastic assumption of the classical linear regression model (3 marks) w