Laura is very excited to see that if there appears to have a relationship between advertising expense and sales. Use the regression equation to find the estimated sales if the company spends $40,000 on advertising. Is it reasonable?

10. Laura brings the figure she found in problem 9 to her supervisor and suggests the company to spend $40,000 in advertising the following month. One month later, Laura was surprised to find out that the sales did not reach the expected amount. The sales improved, but it was only $480,000. Can you explain why it happened?

Laura has just started her first job as a marketing analyst at a toy store. Her first assignment is to study the advertising expenses and toys sales of the company during the past 12 months. She wants to know if there is any relationship between advertising expenditure and sales. With the information, she would like make recommendation to her supervisor of an appropriate advertising expense to increase sales of the company. Here is the advertising and sales information Laura obtained from the company database. Advertising Expenditure $ 12,500 $ 20,000 $ $ $ $ $ $ 13,500 22,000 15,700 19,800 10,000 23,500 Monthly Sales 330,250 400,500 352,500 412,500 368,000 395,000 295,000 425,000 $ $ $ $ $ $ $ $