Brewsky's Is a Chain of Micro-Breweries -
in a Regression Equation Expressed as Y = a the Costs

question 122

Multiple Choice

Brewsky's is a chain of micro-breweries. Managers are interested in the costs of the stores and believe that the costs can be explained in large part by the number of customers patronizing the stores. Monthly data regarding customer visits and costs for the preceding year for one of the stores have been entered into the regression analysis and the analysis is as follows:
$\begin{array}{llr} \text { Average monthly customer visits } &&1,462\\ \text { Average monthly total costs } &&\$4,629\\& \text { Regression Results} &\\ \text { Intercept} &&\$1,496\\ \text { \( b \) coefficient} &&\$2.08\\ \text { R } ^{2}&&0.86814\\ \end{array}$

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In a regression equation expressed as y = a + bx, how is the letter b best described? (CMA adapted)

• A) An estimate of the probability of return customers.
• B) The fixed costs per customer visit.
• C) The estimate of the cost for an additional customer visit.
• D) The proximity of the data points to the regression line.

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Definitions:

Profit Center

A business segment or department within an organization that is responsible for generating its own revenue and thereby directly impacting profitability.

Responsibility Center

A department or unit within an organization that is accountable for specific activities and performance, with its performance measured against planned objectives.

Generates Revenues

Refers to the activities or mechanisms through which a business or organization brings in income.

Traceable Fixed Cost

A fixed cost that can be directly associated with a specific cost object, such as a product, department, or project.