Answered: Accountants at the Tucson firm, Larry…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

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 vo uchers submitted from
the past year. Then they developed the following multiple regression
equation relating expected travel cost to number of days on
the road (x1) and distance traveled (x2) in miles:
y = $90.00 + $48.50x1 + $.40x2
The coefficient of correlation computed was .68.
a) If Barba ra Downey returns from a 300-miJe 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?

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