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    Calculating Regression line

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    A company's sales (in million units), selling expenses (in $million), and price (in $/unit) data are provided in the table below.

    (A) Calculate the sample regression line, where sales is the dependent variable and selling expenses and price are the independent variable

    (B) Forecast the company's sales if the company increases its selling expenses to $10 million and its price to $8.5/unit

    (C) If the company's objective is maximizing net revenue (total revenue minus selling expenses), which of the three following options should be accepted: (1) increase selling expenses to $10 million and price to $8.5/unit, (2) increase selling expenses to $10 million and price to $9.0/unit, and (3) increase selling expenses to $11 million and price to $8.5/unit

    Million of Units $ Million $
    Y X1 X2
    Sales Selling Expanse Price
    6.000 2.000 0.00
    4.000 1.000 1.00
    16.000 8.000 2.00
    10.000 5.000 3.00
    12.000 6.000 4.00
    8.000 4.000 5.00
    12.000 7.000 6.00
    16.000 9.000 7.00
    14.000 8.000 8.00

    © BrainMass Inc. brainmass.com October 10, 2019, 2:53 am ad1c9bdddf
    https://brainmass.com/economics/regression/calculating-regression-line-398265

    Attachments

    Solution Preview

    Please refer attached MS Excel file for regression results.

    (A) Calculate the sample regression line, where sales is the dependent variable and selling expenses and price are the independent variable
    Refer to attached Excel File, we get
    Y=2.529+1.758X1-0.352X2

    Where Y= Sales in millions of units
    X1=Selling expenditure in $ million
    X2=Price $/unit

    (B) ...

    Solution Summary

    Solution calculates regression line using MS Excel. It also makes predictions with the help of results obtained.

    $2.19