United States Motors Inc. (USMI) manufactures automobiles and light trucks and distributes them for sale to consumers through franchised retail outlets. As part of the franchise agreement, dealerships must provide monthly financial statements following the USMI accounting procedures manual. USMI has developed the following financial profile of an average dealership that sells 3,400 new vehicles annually:

AVERAGE DEALERSHIP FINANCIAL PROFILEComposite Income StatementSales$68,000,000Cost of goods sold56,100,000Gross profit$11,900,000Operating costsVariable1,955,000Mixed5,236,000Fixed4,202,400Operating income$506,600

USMI is considering a major expansion of its dealership network. The vice president of marketing has asked Jack Snyder, corporate controller, to develop some measure of the risk associated with the addition of these franchises. Jack estimates that 90% of the mixed costs shown are variable for purposes of this analysis.He also suggests performing regression analyses on the various components of the mixed costs to more definitively determine their variability.

Required:

1. Calculate the composite dealership profit if 4,850 units are sold.

3. The regression equation that Jack Snyder developed to project annual sales of a dealership has anR-squared of 60% and a standard error of the estimate of $10,200,000. If the projected annual sales for a dealership total $64,600,000, determine the approximate 95% confidence interval for Jack's prediction of sales.(Hint:The 95% confidence interval uses 2 standard errors in determining the interval.)

Format needed:

\f-Required1 l RequiredB ! 111e regression equation that Jack Snyder developed to project annual sales. oi a dealership has an Rsquared of 60% and a standard error ofthe estimate of $10,200,000. If the projected annual sales for a dealership total $64,600,000, determine the approximate 95% condence interval for Jack's prediction of sales. (Hint: The 95% condence interval uses 2 standard deviations.) Shaw least