Question

Brewsky's is a chain of micro-breweries. Managers are interested in the costs of the stores and believe that the costs can be explained in large part by the number of customers patron­izing the stores. Monthly data regarding customer visits and costs for the preceding year for one of the stores have been entered into the regression analysis and the analysis is as follows:

Average monthly customer visits		1,690
Average monthly total costs	$	4,914
Regression Results
Intercept	$	1,724
b coefficient	$	2.38
R2		0.89113

Based on the data derived from the regression analysis, what are the estimated costs for 1,500 customer visits in a month? (CMA adapted)

• $3,570.

• $5,294.

• $6,638.

• $4,914.

Answer 1

Answer : $ 5,294

Regression Equation = Y=a+bX

Regression equation = $1,724+($ 2.38 *customers Visitts)

Estimated Cost = $ 1,724+($2.38*1,500) = $5,294 (Answer)