Question

AAA Inc sells metal sports bottles. The bottles sell for $3.00. Regression for the number of bottles sold and the related costs appear below. Multiple R R Square Adjusted R Square Standard Error Coefficients Intercept 2504.41 Variable 1 1.98 0.981063 0.962484 0.949978 672.8269 Std Error t Stat P-value 95% 9305.639) 0.269128 0.8052E-06-27110.3 0.226296 8.77299 0.0019E-04 1.265119 95% 32119.11 2.70547 95% -27110.3 1.265119 95% 32119.11 2.70547 CH 4 AP. By how much will profits increase in total if 3,000 more units are sold? Some other answer $9,056 $3,060 $6,068 $556

Answer 1

From the ANOVA table from regression Analysis, Fixed costs (Intercept) = Variable cost per unit (X Variable 1) = $2,504.41 $1.98 Cost function = Fixed costs + (Variable cost per unit x Number of units sold) Multiple R 0.981063 R Square 0.962484 Adjusted R Square 0.949978 672.8269 Coefficients Std Error Stat P-value 95% 95% 95% 95% Intercept 2504.41 9305.639 0.2691280.8052E-06 27110.3 32119.11 27110.3 32119.11 Nariable 1 1.98 0.226296 8.77299 0.00198-04 1.265119 2.70547 1.265119 2.70547 Standard. Brod Cost function = $2504.41 +($1.98 x Number of units sold) Cost function = $2504.41 + $1.98X ; where 'X' represents 'Number of units sold' Number of units sold Variable cost per unit Estimated variable cost Add: Fixed cost Estimated total cost Sale value Estimated total profit 3,000 $1.98 $5,940 (3000 units x $1.98] $2,504 $8,444 ($5940 + $2504] $9,000 (3000 units x $3.00] $556 ($9000 - $8444] --> Option-(e)