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Kathy Smith, owner of Flowers 4 You, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a
Kathy Smith, 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, Smith wants to set the delivery fee based on the distance driven to deliver the flowers. Smith 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: E: (Click the icon to view the regression analysis.) Read the requirements. Requirement 1. Determine the firm's cost equation (use the output from the Excel regression). (Enter amounts to two decimal places.) X Requirements 1. Determine the firm's cost equation (use the output from the Excel regression). 2. Determine the R-squared (use the output from the Excel regression). What does Flowers 4 You's R-squared indicate? 3. Predict van operating costs at a volume of 15,000 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? Print Done Regression analysis X B E G 1 SUMMARY OUTPUT 2 Regression Statistics 0.86 3 Multiple R 4 R Square 0.75 0.7 5 Adjusted R Square 6 Standard Error 171.55 7 Observations 7 8 ANOVA 9 df SS MS F Significance F 14.79 0.0120 10 Regression 435,336.22 435,336.22 147.149.49 11 Residual 5 29,429.90 12 Total 6 582,485.71 13 Coefficients Standard Error I Stat P-value Lower 95% Upper 95% 3,667.85 14 Intercept 709.81 1,150.73 0.62 0.56 -2.248.24 15 X Variable 1 0.29 0.07 3.85 0.01 0.09 0.48 Print Done
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