A Local Gym Has Discovered That Their Demand for Personal

question 107

Short Answer

A local gym has discovered that their demand for personal trainers (measured in hours) is related not only to their own advertising expenditures in the prior month, but also to the demand for doughnuts and swim gear in the prior month at neighboring stores. The gym has developed the following regression model to forecast demand for personal trainers:
Demand = 185 + (0.15∗advertising expenditures) - (0.05∗doughnuts) + (0.23∗swim gear sales)
What is the forecast for October, given advertising expenditures of 1000, doughnut sales of 2450, and swim gear sales of 782 in September?

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Definitions:

Period Costs

Expenses that are not directly tied to the production process and are expensed in the period they are incurred.

Variable Cost

Expenses that change in proportion to the activity of a business such as costs of goods sold, raw materials, and labor expenses.

Fixed Manufacturing Cost

Costs that remain constant regardless of the level of production, such as rent, salaries, and maintenance expenses.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including depreciation, utilities, and salaries for supervisors.