Required information Problem 5-68 (Static) Cost Estimation: Simple and Multiple Regression Using a Spreadsheet (Appendix A) (LO 5-4, 5, 6, 9) [The following information applies to the questions displayed below.] Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. During a discussion, one of the managers suggests that number of employees might be better at explaining cost than store revenues. As a result of that suggestion, managers collected the following information from last year's operations (revenues and costs in thousands of dollars): Store 101$ 102 103 104 105 106 107 108 109 110 111 112 113 114 115 Costs 4,214 2,894 5,181 3,998 3,676 3,319 5,029 2,374 4,688 2,959 4,179 3,200 2,556 4,655 2,986 Employees 39$ 29 47 38 33 38 54 26 44 35 37 41 35 42 28 Revenues 4,100 2,227 5,738 3,982 2,914 4,023 6,894 1,779 5,416 3,228 3,886 4,690 3,552 4,817 2,124 Problem 5-68 (Static) Part a Required a. Use the high-low method to estimate the fixed and variable portions of store costs based on employees. (Do not round your intermediate calculation. Negative amounts should be indicated by a minus sign. Round your answer to the nearest whole number in thousands of dollars).) Variable cost (per employee) Fixed cost Problem 5-68 (Static) Part b b. Use the results of your high-low analysis to estimate the cost for a store with 30 employees. (Do not round your intermediate calculation. Enter your answers in thousands of dollars.) Store cost Problem 5-68 (Static) Part d Using the results from a simple regression of store cost on employees, input the following data: d-1. Enter the regression coefficients. d-2. Estimate the cost of a store with 30 employees using the results from a simple regression of store cost on employees. Complete this question by entering your answers in the tabs below. Req D1 Req D2 Enter the regression coefficients. (Round your answers to 1 decimal place. Negative amounts should be indicated by a minus sign.) Intercept Employees Problem 5-68 (Static) Part d Using the results from a simple regression of store cost on employees, input the following data: d-1. Enter the regression coefficients. d-2. Estimate the cost of a store with 30 employees using the results from a simple regression of store cost on employees. Complete this question by entering your answers in the tabs below. Req D1 Req D2 Estimate the cost of a store with 30 employees using the results from a simple regression of store cost on employees. (Round your intermediate calculations to 1 decimal place. Round your answer to 1 decimal place.) Store cost Problem 5-68 (Static) Part e e-1. Enter the regression coefficients. e-2. Estimate the cost of a store with revenues of $2.5 million and 30 employees using the results of a multiple regression of store cost store revenues and employees. Complete this question by entering your answers in the tabs below. Req E1 Req E2 Estimate the cost of a store with revenues of $2.5 million and 30 employees using the results of a multiple regression of store costs on store revenues and employees. (Round "Intercept" and "Employees" to 1 decimal place and "Revenues" to 2 decimal places in the intermediate calculations. Round your final answers to 1 decimal place.) Store cost Problem 5-68 (Static) Part d Using the results from a simple regression of store cost on employees, input the following data: d-1. Enter the regression coefficients. d-2. Estimate the cost of a store with 30 employees using the results from a simple regression of store cost on employees. Complete this question by entering your answers in the tabs below. Req D1 Req D2 Estimate the cost of a store with 30 employees using the results from a simple regression of store cost on employees. (Round your intermediate calculations to 1 decimal place. Round your answer to 1 decimal place.) Store cost Problem 5-68 (Static) Part e e-1. Enter the regression coefficients. e-2. Estimate the cost of a store with revenues of $2.5 million and 30 employees using the results of a multiple regression of store cost store revenues and employees. Complete this question by entering your answers in the tabs below. Req E1 Req E2 Estimate the cost of a store with revenues of $2.5 million and 30 employees using the results of a multiple regression of store costs on store revenues and employees. (Round "Intercept" and "Employees" to 1 decimal place and "Revenues" to 2 decimal places in the intermediate calculations. Round your final answers to 1 decimal place.) Store cost
