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Accounting Information Sysytem

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Jessica, the financial manager at Chila restaurant, is checking to see if there is any relationship between newspaper advertising and sales revenues at the restaurant. She has accumulated the following data for the past 10 months:
Month Revenues Advertising Costs
March $150,000 $20,000
April 170,000 30,000
May 155,000 15,000
June 165,000 35,000
July 155,000 10,000
August 165,000 20,000
September 145,000 15,000
October 180,000 40,000
November 155,000 25,000
December 160,000 25,000

a. Use Excel's regression features to determine the regression line. What is the increase in revenues for each $1,000 spent on advertising? Use Excel's built-in function to determine the R-squared value for this regression line.

b. Use Excel's conditional formatting feature to place borders around all months with sales greater than $150,000.

c. Would you recommend that Chila continue advertising? Why or why not? Using Word and an appropriate memo format, write a short (1-2 paragraph) memo to Jessica summarizing your recommendation and the reasons for your recommendation. Grammar counts.

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Solution Preview

See the attached file.

Step 1: List the variables
Step 2. Do the regression
The following are the steps:
Click Data, Data Analysis, Choose Regression
The Y input range is the dependent variable which is Revenues
The X input range is the independent variable which is Advertising Costs

Regression Statistics
Multiple R 0.8017
R Square 0.6427
Adjusted R Square 0.5981
Standard Error 6,513.5253 ...

Solution Summary

The solution discusses an accounting information system.