Question

Required informatio [The following information applies to the questions displayed below.] Lexon Inc. is a large manufacturer of affordable DVD players. Management recently became aware of rising expenses resulting from returns of malfunctioning products. As a starting point for further analysis, Paige Jennings, the controller, wants to test different forecasting methods and then use the best one to forecast quarterly expenses for 2019. The relevant quarterly data for the previous three years follow: 2016 Return 2017 Return 2018 Return Quarter ExpensesQuarter Expenses QuarterExpenses 14,300 13,200 13,000 15,700 13,250 12,000 12,300 14,500 13,700 12,900 12,500 15,000 The result of a simple regression analysis using all 12 data points yielded an intercept of $12,512.12 and a coefficient for the independent variable of $156.47. (R-squared 0.50, SE $1,034.95.) 2. Looking at the graph you prepared for requirement 1, select two representative data points and calculate the quarterly forecast for 2019 using the high-low method 3. Calculate the quarterly forecasts for 2019 using the results of a regression analysis. Evaluate the results of the regression analysis and make appropriate changes to improve the model

2019 Quarter Return expenses

1	..
2
3
4

Calculate the quarterly forecasts for 2019 using the results of a regression analysis. Evaluate the results of the regression analysis and make appropriate changes to improve the model. (Round your answers to 2 decimal places for Regression One.)

Regression One

2019 Quarter	Predicted expenses
1
2
3
4

Regression Two

2019 Quarter	Predicted Expenses
1
2
3
4

Answer 1

1.

Return Expenses 14000 6.47x 125 12000 8000 6000 2000 1 23 45 6 78 9 10 1112 Return Expenses Linear (Return Expenses)

2.

Year	Quarter	Return Expenses
2016	1	13250
	2	12000	Lowest
	3	12300
	4	14500
2017	5	13700
	6	12900
	7	12500
	8	15000
2018	9	14300
	10	13200
	11	13000
	12	15700	Highest

Lets say, the equation of the line is Y = mx + c

When x=2, Y = 12,000

12000 = 2m+c

When x=12, Y = 15,700

15,700 = 12m+c

Solving both equations , we get m( Slope) = 370, c (intercept)= 11,260

Therefore equation of the line is Y = 370x + 11,260

For 2019, 1st quarter x=13, Y = 370x + 11,260 = 370*13+11,260 = 16,070

2nd quarter, x=14, Y = 370x + 11,260 = 370*14+11,260 = 16,440

3rd quarter , x=15, Y = 370x + 11,260 = 370*15+11,260 = 16,810

4th quarter , x=16, Y = 370x + 11,260 = 370*16+11,260 = 17180

Regression One
2019 Quarter	Predicted expenses
1	16070.00
2	16440.00
3	16810.00
4	17180.00

3.

Equation of the line is Y = 156.47x + 12,512

For 2019, 1st quarter x=13, Y = 156.47x + 12,512 = 156.47*13+12,512 = 14,546.11

2nd quarter, x=14, Y = 156.47x + 12,512 = 156.47*14+12,512 = 14,702.58

3rd quarter , x=15, Y = 156.47x + 12,512 = 156.47*15+12,512 = 14,859.05

4th quarter , x=16, Y = 156.47x + 12,512 = 156.47*16+12,512 = 15,015.52

Regression Two
2019 Quarter	Predicted expenses
1	14,546.11
2	14,702.58
3	14,859.05
4	15,015.52