Accountants at the Tucson firm, Larry Youdelman, CPAs, believed that several traveling executives were submitting unusually high travel vouchers when they returned from business trips. First, they took a sample of 200 vouchers submitted from the past year. Then they developed the following multi pie-regression equation relating expected travel cost to number of days on the road ( X 1 ) and distance traveled ( X 2 ) in miles: y ⌢ = $ 90 , 00 + $ 48.50 x 1 + $ .40 x 2 The coefficient of correlation computed was .68. a) If Barbara Downey returns from a 300-mile trip that took her out of town for 5 days, what is the expected amount she should claim as expenses? b) Downey submitted a reimbursement request for $685. What should the accountant do? c) Should any other variables be included? Which ones? Why?
Solution Summary: The author explains that forecasting is used to predict future changes or demand patterns. It involves different approaches and varies with different time periods.
Accountants at the Tucson firm, Larry Youdelman, CPAs, believed that several traveling executives were submitting unusually high travel vouchers when they returned from business trips. First, they took a sample of 200 vouchers submitted from the past year. Then they developed the following multi pie-regression equation relating expected travel cost to number of days on the road (X1) and distance traveled (X2) in miles:
y
⌢
=
$
90
,
00
+
$
48.50
x
1
+
$
.40
x
2
The coefficient of correlation computed was .68.
a) If Barbara Downey returns from a 300-mile trip that took her out of town for 5 days, what is the expected amount she should claim as expenses?
b) Downey submitted a reimbursement request for $685. What should the accountant do?
c) Should any other variables be included? Which ones? Why?
Accountants at the Tucson firm, Larry Youdelman,CPAs, believed that several traveling executives were submittingunusually high travel vouchers when they returned from businesstrips. First, they took a sample of 200 vo uchers submitted fromthe past year. Then they developed the following multiple regressionequation relating expected travel cost to number of days onthe road (x1) and distance traveled (x2) in miles:y = $90.00 + $48.50x1 + $.40x2The coefficient of correlation computed was .68.a) If Barba ra Downey returns from a 300-miJe trip that took herout of town for 5 days, what is the expected amount she shouldclaim as expenses?b) Downey submitted a reimbursement request for $685. Whatshould the accountant do?c) Should any other variables be included? Which ones? Why?
Chapter 4 Solutions
Principles of Operations Management: Sustainability and Supply Chain Management (10th Edition)
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