SCENARIO 18-12 The Marketing Manager for a Nationally Franchised Lawn Service Company

question 191

Multiple Choice

SCENARIO 18-12
The marketing manager for a nationally franchised lawn service company would like to study the characteristics that differentiate home owners who do and do not have a lawn service. A random sample of 30 home owners located in a suburban area near a large city was selected; 15 did not have a lawn service (code 0) and 15 had a lawn service (code 1) . Additional information available concerning these 30 home owners includes family income (Income, in thousands of dollars) , lawn size (Lawn Size, in thousands of square feet) , attitude toward outdoor recreational activities (Attitude 0 = unfavorable, 1 = favorable) , number of teenagers in the household (Teenager) , and age of the head of the household (Age) . The Minitab output is given below:

-Referring to Scenario 18-12, which of the following is the correct interpretation for the Attitude slope coefficient?

• A)Holding constant the effect of the other variables,the estimated number of lawn service purchased is 12.74 lower for a home owner who has a favorable attitude toward outdoor recreational activities than one that has an unfavorable attitude.
• B)Holding constant the effect of the other variables,the estimated odds ratio of purchasing a lawn service is 12.74 lower for a home owner who has a favorable attitude toward outdoor recreational activities than one that has an unfavorable attitude.
• C)Holding constant the effect of the other variables,the estimated natural logarithm of the odds ratio of purchasing a lawn service is 12.74 lower for a home owner who has a favorable attitude toward outdoor recreational activities than one that has an unfavorable attitude.
• D)Holding constant the effect of the other variables,the estimated probability of purchasing a lawn service is 12.74 lower for a home owner who has a favorable attitude toward outdoor recreational activities than one that has an unfavorable attitude.

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Definitions:

Fixed Production Costs

Payments that stay unchanged regardless of how much is produced or sold, covering rent, salaries, and insurance.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenues.

Absorption Costing

A costing approach that encompasses all expenses related to production, including direct materials, direct labor, and all manufacturing overheads, both variable and fixed, as part of a product's cost.

Selling and Administrative Expenses

Expenses related to the selling of products and the management of the business, not directly tied to production.