Kristen Reynolds, owner of Rose Red, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Reynolds wants to set the delivery fee based on the distance driven to deliver the flowers. Reynolds 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. Rose Red does a regression analysis on the next year's data using Excel. The output generated by Excel is as follows: (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 y= Requirements Regression analysis A 1 2 SUMMARY OUTPUT Regression Statistics 3 Multiple R 0.85 4 R Square 0.72 5 Adjusted R Square 0.66 6 Standard Error 207.23 7 Observations 7 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 Rose Red's R-squared 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-squared. Should the company rely on this cost estimate? Why or why not? 8 ANOVA 9 10 Regression Print Done D E F G df SS MS F Significance F 1 545,878.49 11 Residual 5 214,721.51 545,878.49 42,944.30 12.71 0.0161 12 Total 6 13 Coefficients 760,600.00 Standard Error t Stat P-value Lower 95% 14 Intercept 947.20 1,217.79 0.78 0.47 15 X Variable 1 0.27 0.08 3.57 0.02 -2,183.23 0.08 Upper 95% 4,077.64 0.46 Print Done