Exhibit 14-6 You Are Given the Following Information About Y and X

question 2

Essay

Exhibit 14-6
You are given the following information about y and x.
-Given below are seven observations collected in a regression study on two variables, x (independent variable) and y (dependent variable). Use Excel to develop a scatter diagram and to compute the least squares estimated regression equation and the coefficient of determination.

Estimate the changes in net operating income as a result of pricing, cost, and advertising decisions.

Calculate and analyze the impact of changes in variable costs, fixed costs, and selling prices on a company's financial performance.

Determine the margin of safety and its importance in assessing financial risk.

Apply the degree of operating leverage to estimate the impact of sales changes on net operating income.

---

Definitions:

SSR

Sum of Squares due to Regression, an indicator of the explanatory power of the independent variables in a regression model.

SSE

Sum of Squared Errors, a measure used in statistics to quantify the deviation of the model predictions from the actual observed values.

Estimated Regression Equation

An equation derived from regression analysis used to predict the dependent variable based on one or more independent variables.

SSR

Sum of Squares due to Regression, a measure used in statistical analysis to determine the explanatory power of a regression model.