TABLE 16-6 The President of a Chain of Department Stores Believes That

question 96

Short Answer

TABLE 16-6
The president of a chain of department stores believes that her stores' total sales have been showing a linear trend since 1993.She uses Microsoft Excel to obtain the partial output below.The dependent variable is sales (in millions of dollars),while the independent variable is coded years,where 1993 is coded as 0,1994 is coded as 1,etc.
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.604
R Square 0.365
Adjusted R Square 0.316
Standard Error 4.800
Observations 17
Coefficients
Intercept 31.2
Coded Year 0.78
-Referring to Table 16-6,the forecast for sales (in millions of dollars)in 2013 is ________.

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Definitions:

Mixed Cost

Expenses that have both fixed and variable components, changing in total with the level of activity but also containing a constant element.

Least-squares Regression

A statistical technique that identifies the most accurate line of fit by reducing the total of the squared differences between the actual and forecasted values.

Mixed Cost

Expenses that contain both fixed and variable components, changing with the level of output or activity.

High-low Method

A technique used in managerial accounting to estimate variable and fixed cost components of a cost formula, using the highest and lowest levels of activity.