A Regression Analysis Between Sales (In $1,000) and Advertising (In

question 231

Multiple Choice

A regression analysis between sales (in $1,000) and advertising (in $1,000) resulted in the following least squares line: .This implies that:

• A) as advertising increases by $1,000, sales increases by $5,000.
• B) as advertising increases by $1,000, sales increases by $80,000.
• C) as advertising increases by $5, sales increases by $80.
• D) None of these choices.

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Definitions:

Controllable Costs

For a level of management, the costs that can be influenced (increased, decreased, or eliminated) by management at that level.

Management

The process of dealing with or controlling things or people, often within a business or organization.

Manufacturing Margin

The difference between the sales revenue generated from manufactured goods and the cost of goods sold.

Variable Costing

An accounting method that considers only variable costs in calculating the cost of goods sold and determining profitability.