Regression Analysis the Local Grocery Store Wants to Predict

question 109

Multiple Choice

Regression Analysis The local grocery store wants to predict the daily sales in dollars.The manager believes that the amount of newspaper advertising significantly affects the store sales.He randomly selects 7 days of data consisting of daily grocery store sales (in thousands of dollars) and advertising expenditures (in thousands of dollars) .The Excel/Mega-Stat output given above summarizes the results of the regression model. At a significance level of .05,test the significance of the slope and state your conclusion.

• A)We reject H₀ and conclude there is sufficient evidence that dollars spent on advertising is a useful linear predictor of the grocery store sales.
• B)We failed to reject H₀ and conclude there is not sufficient evidence that dollars spent on advertising is a useful linear predictor of the grocery store sales.
• C)We failed to reject H₀ and conclude there is sufficient evidence that dollars spent on advertising is a useful linear predictor of the grocery store sales.
• D)We reject H₀ and conclude that there is sufficient evidence that grocery store sales in dollars is a useful linear predictor of the dollars spent on advertising.
• E)We reject H₀ and conclude that there is not sufficient evidence that dollars spent on advertising is a useful linear predictor of the grocery store sales.

---

Definitions:

Variable Costing

A method of costing that includes only variable production costs in product costs, treating fixed manufacturing overhead as a period cost to be charged against revenue in the period incurred.

Absorption Costing

A strategy in accounting that involves incorporating costs related to manufacturing, including direct materials, direct labor, and variable and fixed overheads, into the price point of a product.

Production Cost

The total expense incurred in manufacturing a product, including materials, labor, and overhead.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead in the cost of a product.