The following data were collected during a 13-month from a company?s sales repor

Question

The following data were collected during a 13-month from a company?s sales reports. The report shows for each month, how much the company has spent for advertising (x) and how much sales were made during that month (y). Both the advertising and sales dollars are in units of $million. The Chief Executive Officer of the company is interested in the impact of the advertising spending on the actual sales. (a) Obtain a linear regression line for the data. (Hint: You need to calculate a and b to get the linear regression equation: y= a +bx) (b) Predict the sales figures in month 14 and 15 if the advertising budgets allocated for months 14 and 15 are $25 million and $30 million, respectively.

Explanation / Answer

------------

a) Linear regression line = 66.33+0.58379*advertising budget

-----------

b) Predictions:

For the month 14:

Budget = $25 million

Sales = 66.33+0.58379*25

=$80.92 million

hence, the sales would be $80.92 million when the budget is $25 million

For the month 15:

Budget = $30 million

Sales = 66.33+0.58379*30

=$83.84 million

hence, the sales would be $83.84 million when the budget is $30 million

SUMMARY OUTPUT Regression Statistics Multiple R 0.869093166 R Square 0.755322932 Adjusted R Square 0.733079562 Standard Error 4.219187124 Observations 13 ANOVA df SS MS F Significance F Regression 1 604.4907524 604.4907524 33.95721678 0.000114626 Residual 11 195.8169399 17.80153999 Total 12 800.3076923 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 66.33333333 3.053623452 21.72282679 2.19863E-10 59.61235344 73.05431323 59.61235344 73.05431323 x 0.583788707 0.100181988 5.827282109 0.000114626 0.363289638 0.804287776 0.363289638 0.804287776

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.