Beltel Communications Division has estimated its production cost using a regression relationship based on the last 12 months of data as $30,000 per month plus $40 per telephone. The standard error of the production cost is $7,200. The division sells its telephones for $60 each.

Required:

1. What is the best estimate of the monthly sales in telephones needed to breakeven?
2. How many telephones would the division need to sell next month to be 90% confident of earning a profit?
3. If the division sells 2,400 telephones next month, what is the 90% confidence interval on net income?
4. If the division sells 2,152 telephones next month, what is the probability it will incur a loss?