Melody Leigh, owner of Broadway Floral, operates a local chain of Cost Behavior
ID: 2594790 • Letter: M
Question
Melody Leigh, owner of Broadway Floral, operates a local chain of Cost Behavior 2 Regression Analysis Melody Leigh, owner of Broadway Floral, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Leigh wants to set the delivery fee based on the distance driven to deliver the flowers. Leigh wants to separate the fixed and variable portions of her van operating costs so that she has a better idea of how delivery distance affects these costs. She has the following data from the past seven months 5 Van Operating Costs Month Miles Driven January 15,500 $5,390 8 9 10 February. 17,400 $ 5,280 4,960 5,340 March April May June 15,400 S 16,300 $ 16,500 $5,450 15,200 $5,230 14,400 S4.680 12 3July 15 Use the blue shaded areas onthe ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. iIfExplanation / Answer
1) The company's cost equation y = b0 + b1 X
y = 2163.80 + 0.191358 X
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2) R square = 0.474592
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3) The operating cost at a volume of 16,500 miles = 2163.80 + 0.191358 * 16,500
Operating cost at a volume of 16,500 miles = $ 5,321.207
Month Miles driven Van operating costs 1 15500 5390 2 17400 5280 3 15400 4960 4 16300 5340 5 16500 5450 6 15200 5230 7 14400 4680