Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. During a discussion, one of the managers suggests that number of employees might be better at explaining cost than store revenues. As a result of that suggestion, managers collected the following information from last year's operations (revenues and costs in thousands of dollars): Store 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 Costs $5,292 2,868 5,141 2,292 4,576 5,521 4,186 2,932 2,437 5,431 5,909 3,214 2,018 5,796 2,827 Employees 50 25 52 30 33 53 40 44 30 34 54 41 24 46 33 Revenues $6,803 3,362 3,240 2,531 3,571 6,848 2,876 3,296 4,738 5,832 4,201 4,319 4,781 3,628 4,991 b. Use the results of your high-low analysis to estimate the cost for a store with 45 employees. (Do not round your intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answer to the nearest whole number (in thousands of dollars).) Store cost c. Prepare a scattergraph between store cost and employees. Instructions: 1. Click on a point to the right of the graph. 2. Click within the graph to place the point. 3. To enter exact coordinates, click on the point and then click on the processing wheel symbol and then enter the exact coordinates in the dialog box that pops up. 4. Click OK. Methods of Estimating Costs: Davis Stores ok Store 101 $7.000 int Store 102 $6,000 $5,000 Fences Store 103 $4,000 Costs ($000) Store 104 $3,000 $2,000 Store 105 $1,000 Store 106 SO 10 20 30 40 50 60 Employees Store 107 d-1. Enter the regression coefficients. d-2. Estimate the cost of a store with 45 employees using the results from a simple regression of store cost on employees. Complete this question by entering your answers in the tabs below. Reg D1 Reg D2 Enter the regression coefficients. (Round your answers to 2 decimal places. Negative amou sign.) Intercept Employees d-1. Enter the regression coefficients. d-2. Estimate the cost of a store with 45 employees using the results from a simple regression of store cost on employees. Complete this question by entering your answers in the tabs below. Reg D1 Req D2 Estimate the cost of a store with 45 employees using the results from a simple regression your intermediate calculations and final answer to 2 decimal places.) Store cost
