6#2

Meyer,

owner of

Flower Power,

operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee,

Meyer

wants to set the delivery fee based on the distance driven to deliver the flowers.

Meyer

wants to separate the fixed and variable portions of

her

van operating costs so that

she

has a better idea how delivery distance affects these costs.

She

has the following data from the past seven months:

LOADING...

(Click the icon to view the data.)Read the requirements

LOADING...

.

Requirement 1. Determine the company's cost equation (use the output from the Excel regression). (Round the amounts to two decimal places.)

y =

x +

Requirement 2. Determine the R-squared (use the output from the Excel regression).

The R-squared is

0.695292

0.258992

0.405078

0.746077

0.863757

.What does

Flower Power's

R-squared indicate?The R-squared indicates that the cost equation explains

25.9 %25.9%

40.5 %40.5%

86.4 %86.4%

69.5 %69.5%

74.6 %74.6%

of the variability in the data. In other words, it

does not fit the data at all.

fits the data quite well.

should be used with caution.

Flower Power

will not

may or may not

should

feel confident using this cost equation to predict total costs at other volumes within the same relevant range.Requirement 3. Predict van operating costs at a volume of

14,500

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? (Round your answer to the nearest cent.)

The operating costs at a volume of 14,500 miles is

.

Should the company rely on this cost estimate? Why or why not?

Since the R-squared is

, the company

Data table

Dialog content starts

Month	Miles Driven	Van Operating Costs
January. . . . . .	16,500	$5,260
February. . . . .	18,500	$5,730
March. . . . . .	16,100	$4,960
April. . . . . . . .	17,100	$5,420
May. . . . . . . .	17,500	$5,790
June. . . . . . .	15,800	$5,300
July. . . . . . . . .	15,500	$5,040