Beltel Communications Division has estimated its production cost using a regression relationship based on the last 12 months of data as $30,000 per month plus $40 per telephone. The standard error of the production cost is $7,200. The division sells its telephones for $60 each. Required: What is the best estimate of the monthly sales in telephones needed to breakeven? How many telephones would the division need to sell next month to be 90% confident of earning a profit? If the division sells 2,400 telephones next month, what is the 90% confidence interval on net income? If the division sells 2,152 telephones next month, what is the probability it will incur a loss?
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
Beltel Communications Division has estimated its production cost using a regression relationship based on the last 12 months of data as $30,000 per month plus $40 per telephone. The standard error of the production cost is $7,200. The division sells its telephones for $60 each. Required: What is the best estimate of the monthly sales in telephones needed to breakeven? How many telephones would the division need to sell next month to be 90% confident of earning a profit? If the division sells 2,400 telephones next month, what is the 90% confidence interval on net income? If the division sells 2,152 telephones next month, what is the
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