Question

	A	B	C	D	E	F	G
1	SUMMARY OUTPUT
2	Regression Statistics
3	Multiple R		0.85
4	R Square		0.72
5	Adjusted R Square		0.66
6	Standard Error		207.23
7	Observations		7
8	ANOVA
9		df	SS	MS	F	Significance F
10	Regression	1	545,878.49	545,878.49	12.71	0.0161
11	Residual	5	214,721.51	42,944.30
12	Total	6	760,600.00
13		Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
14	Intercept	947.20	1,217.79	0.78	0.47	-2,183.23	4,077.64
15	X Variable 1	0.27	0.08	3.57	0.02	0.08	0.46

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 Kristen Battle, owner of Tulip Time, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Battle wants to set the delivery fee based on the distance driven to deliver the flowers. Battle wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. Tulip Time does a regression analysis on the next year's data using Excel. The output generated by Excel is as follows:

 Requirements

 1. Determine the firm's cost equation (use the output from the Excel regression).

 2. Determine the R-squared (use the output from the Excel regression). What does Tulip Time's R-squared indicate?

 3. Predict van operating costs at a volume of 16,000 miles assuming the company would use the cost equation from the Excel regression regardless of its R-squared. Should the company rely on this cost estimate? Why or why not?

Answer 1