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Kallie Chen, owner of Flower Direct, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat
Kallie Chen, owner of Flower Direct, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Chen wants to set the delivery fee based on the distance driven to deliver the flowers. Chen 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: : (Click the icon to view the data.) Read the requirements. Requirement 1. Determine the company's cost equation (use the output from the Excel regression). (Round the amounts to two decimal places.) Data Table y=$ +$ Requirement 2. Determine the R-square (use the output from the Excel regression). Miles Driven 15,900 The R-square is Month January ................... February......... March Van Operating C $5,430 $5,740 $4,940 17,300 What does Flower Direct's R-square indicate? 14,600 April .................. 16,300 $5,270 The R-square indicates that the cost equation explains of the variability in the data. In other words, it Flower Direct 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-s (Round your answer to the nearest cent.) May May .................. $5,820 June.................. 17,200 15,200 14,300 $5,400 $4,990 JU IV. . . . . . . . . . . . . . . . . . . The operating costs at a volume of 14,500 miles is $ Should the company rely on this cost estimate? Why or why not? Print Print Done Done Since the r-square is V, the company
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