# Regression Analysis

The following data have been collected by an accountant who is performing an audit of account balances for a major retail company. The population from which the data were collected represented those accounts for which the customer had indicated the balance was incorrect. The dependent variable, y, is the actual account balance as verified by the accountant. The independent variable, x, is the computer account balance.

y $233 10 24 56 78 102 90 200 344 120 18

x $245 12 22 56 90 103 85 190 320 120 23

a) Compute the least squares regression equation.

b) If the computer account balance was $100, what would you expect to be the actual account balance as verified by the accountant?

c) Is the regression equation significant?

d) If " yes," at what level (s) of significance?

e) Write a statement that clearly states the relationship between the independent and the dependent variables. (if significant, be sure to state positive or negative; or direct or inverse, respectively - your choice.)

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#### Solution Summary

The following data have been collected by an accountant who is performing an audit of account balances for a major retail company. The population from which the data were collected represented those accounts for which the customer had indicated the balance was incorrect. The dependent variable, y, is the actual account balance as verified by the accountant. The independent variable, x, is the computer account balance.

y $233 10 24 56 78 102 90 200 344 120 18

x $245 12 22 56 90 103 85 190 320 120 23

a) Compute the least squares regression equation.

b) If the computer account balance was $100, what would you expect to be the actual account balance as verified by the accountant?

c) Is the regression equation significant?

d) If " yes," at what level (s) of significance?

e) Write a statement that clearly states the relationship between the independent and the dependent variables. (if significant, be sure to state positive or negative; or direct or inverse, respectively - your choice.)