A Local Tire Dealer Wants to Predict the Number of Tires

question 61

Short Answer

A local tire dealer wants to predict the number of tires sold each month. He believes that the number of tires sold is a linear function of the amount of money invested in advertising. He randomly selects 6 months of data consisting of tire sales (in thousands of tires) and advertising expenditures (in thousands of dollars). Based on the data set with 6 observations, the simple linear regression equation of the least squares line is ŷ = 3 + 1x.
∑X = 24
∑X² = 124
∑Y = 42
∑Y² = 338
∑XY = 196
MSE = 4
Using the sums of the squares given above, determine the 95 percent confidence interval for the slope.

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Definitions:

Predetermined Factory Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs based on a selected activity base to individual products.

Actual Activity Base

A measure used to allocate costs based on the actual level of activity or usage, often used in budgeting and accounting.

Predetermined Overhead Rate

An estimated charge used to assign manufacturing overhead costs to individual units of production, calculated before the period begins.

Direct Labor Hours

Direct Labor Hours refer to the amount of time spent by workers directly involved in the production of goods or services, used as a basis for allocating labor costs to products.