Cost Estimation Using High-Low; Graphs Lawson Advertising Agency is trying to persuadeKansas City Sailboards Company to spend more on advertising. The agency’s argument is that a constant and strong positive relationship exists between advertising and sales in the sailboard industry.Sue Lawson presents these data taken from industry data for stores similar in size and market share toKansas City Sailboards:Advertising Expense Annual Sales$2,500 $ 96,000 3,000 110,0003,500 124,0004,000 138,0004,500 143,0005,000 147,0005,500 150,000Required1. Use the high-low method to estimate the relationship between increased advertising and sales.2. Graph annual sales and advertising expense.3. Do the data prove Sue’s point?
Cost Estimation Using High-Low; Graphs Lawson Advertising Agency is trying to persuadeKansas City Sailboards Company to spend more on advertising. The agency’s argument is that a constant and strong positive relationship exists between advertising and sales in the sailboard industry.Sue Lawson presents these data taken from industry data for stores similar in size and market share toKansas City Sailboards:Advertising Expense Annual Sales$2,500 $ 96,000 3,000 110,0003,500 124,0004,000 138,0004,500 143,0005,000 147,0005,500 150,000Required1. Use the high-low method to estimate the relationship between increased advertising and sales.2. Graph annual sales and advertising expense.3. Do the data prove Sue’s point?
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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Cost Estimation Using High-Low; Graphs Lawson Advertising Agency is trying to persuade
Kansas City Sailboards Company to spend more on advertising. The agency’s argument is that a constant and strong positive relationship exists between advertising and sales in the sailboard industry.
Sue Lawson presents these data taken from industry data for stores similar in size and market share to
Kansas City Sailboards:
Advertising Expense Annual Sales
$2,500 $ 96,000
3,000 110,000
3,500 124,000
4,000 138,000
4,500 143,000
5,000 147,000
5,500 150,000
Required
1. Use the high-low method to estimate the relationship between increased advertising and sales.
2. Graph annual sales and advertising expense.
3. Do the data prove Sue’s point?
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