Accountants at the firm Michael Vest, Chartered Accountants, believed that several traveling executives were submitting unusually high travel vouchers when they returned from business trips. First, they took a sample of 200 vouchers submitted from the past year. Then they developed the following multiple-regression equation relating expected travel cost to number of days on the road (x 1) and distance travelled (x 2) in kilometres: ModifyingAbove y with caretequals$85.00plus$46.50x 1plus$0.45x 2. The coefficient of correlation computed was 0.68. a) If Wanda Fennell returns from a 320-kilometres trip that took her out of town for 6 days, the expected amount that she should claim as expensesequals$ 256.9 (round your response to two decimal places). b) Fennell submitted a reimbursement request for $785. What should the accountant do? After the 320-kilometres and 6-day trip, Fennell submitted a reimbursement request for $785, which is different than the predicted value. The accountant should not question question not question the voucher as the request is within expectations within expectations much higher than expected . c) Should any other variables be included? Which ones? Why? Additional variables that could be included in the model are (select the choice that has the factor you would consider): A. Type of travel (air/car) B. Dress code (formal/business casual) C. Gender of the executive (male/female) The percentage of variation in the trip cost that can be explained by the modelequals 0% (round your response to two decimal places), which suggests that the model is not particularly a good one not particularly a good one particularly a good one .
(a)
Claim (Y) = 85 + 46.5 x1 + 0.45 x2
Given, x1 = 6 days and x2 = 320 Km
So, Y = 85 + 46.5*6 + 0.45*320 = $508
(b)
The accountant should question the voucher as the request amount of 785 is higher than the prediction which is 508
(c)
Other relevant variables can be:
(d)
The percentage of variation in the trip cost that can be explained by the model = R2 = 0.68^2 = 46.24%.
This suggests that the model is not particularly a good one as the value is even less than 50%.
Accountants at the firm Michael Vest, Chartered Accountants, believed that several traveling executives were submitting unusually...
Fraud at Berry, CPA’s BERRY, CERTIFIED PUBLIC ACCOUNTANTS Brief History of the Firm In 1999, John Berry graduated from college with an accounting degree. After 10 years at an international accounting firm, John decided to start his firm, Berry, CPA’s. The firm, located in Oakwood, caters to local clients; specifically, John and his staff of four professionals specialize in non-public companies. The majority of the services provided by Berry, CPA’s are tax planning and preparation; however, the firm also performs...