Kaitlyn Coughlin, owner of Flowers 4 You, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Coughlin wants to set the delivery fee based on the distance driven to deliver the flowers. Coughlin 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. Flowers 4 You does a regression analysis on the next year's data using Excel. The output generated by Excel is as follows: B (Click the icon to view the regression analysis.) Requirements 1. Determine the firm's cost equation (use the output from the Excel regression). 2. Determine the R-square (use the output from the Excel regression). What does Flowers 4 You's R-square indicate? 3. Predict van operating costs at a volume of 17,000 miles assuming the company would use the cost equation from the Excel regression regardless of its R-square. Should the company rely on this cost estimate? Why or why not? Requirement 1. Determine the firm's cost equation (use the output from the Excel regression). (Enter amounts to two decimal places.) y=$ O x +$ i Regression analysis SUMMARY OUTPUT Regression Statistics Multiple R 0.83 R Square 0.69 Adjusted R Square Standard Error 0.63 127.80 7 Observations ANOVA df SS F Significance F MS 185,536.45 Regression 11.36 0.0199 185,536.45 81,663.55 Residual 16,332.71 6 267,200.00 Total Standard Lower Upper 95% Coefficients Error t Stat P-value 95% Intercept 2532.42 813.67 3.11 0.03 4,624.02 440.81 0.04 X Variable 1 0.17 0.05 3.37 0.02 0.30 Requirements 1. Determine the firm's cost equation (use the output from the Excel regression). 2. Determine the R-square (use the output from the Excel regression). What does Flowers 4 You's R-square indicate? 3. Predict van operating costs at a volume of 17,000 miles assuming the company would use the cost equation from the Excel regression regardless of its R-square. Should the company rely on this cost estimate? Why or why not? Kaitlyn Coughlin, owner of Flowers 4 You, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Coughlin wants to set the delivery fee based on the distance driven to deliver the flowers. Coughlin 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. Flowers 4 You does a regression analysis on the next year's data using Excel. The output generated by Excel is as follows: B (Click the icon to view the regression analysis.) Requirements 1. Determine the firm's cost equation (use the output from the Excel regression). 2. Determine the R-square (use the output from the Excel regression). What does Flowers 4 You's R-square indicate? 3. Predict van operating costs at a volume of 17,000 miles assuming the company would use the cost equation from the Excel regression regardless of its R-square. Should the company rely on this cost estimate? Why or why not? Requirement 1. Determine the firm's cost equation (use the output from the Excel regression). (Enter amounts to two decimal places.) y=$ O x +$ i Regression analysis SUMMARY OUTPUT Regression Statistics Multiple R 0.83 R Square 0.69 Adjusted R Square Standard Error 0.63 127.80 7 Observations ANOVA df SS F Significance F MS 185,536.45 Regression 11.36 0.0199 185,536.45 81,663.55 Residual 16,332.71 6 267,200.00 Total Standard Lower Upper 95% Coefficients Error t Stat P-value 95% Intercept 2532.42 813.67 3.11 0.03 4,624.02 440.81 0.04 X Variable 1 0.17 0.05 3.37 0.02 0.30 Requirements 1. Determine the firm's cost equation (use the output from the Excel regression). 2. Determine the R-square (use the output from the Excel regression). What does Flowers 4 You's R-square indicate? 3. Predict van operating costs at a volume of 17,000 miles assuming the company would use the cost equation from the Excel regression regardless of its R-square. Should the company rely on this cost estimate? Why or why not
