Month Ticket Revenues Promotional Costs April May $200,000 $52,000 270,000 65,000 June 320,000 80,000 July 480,000 90,000 August September 430,000 100,000 450,000 110,000 October 540,000 120,000 November 670,000 180,000 December 751,000 197,000 She estimates the following regression equation: Ticket revenues = $65,583 + ($3.54 × Promotional costs) 1. Plot the relationship between promotional costs and ticket revenues. Also draw the regression line and evaluate it using the criteria of economic plausibility, goodness of fit, and slope of the regression line. 2. Use the high-low method to compute the function relating promotional costs and revenues. 3. Using (a) the regression equation and (b) the high-low equation, what is the increase in revenues for each $10,000 spent on promotional costs within the relevant range? Which method should Catherine use to predict the effect of promotional costs on ticket revenues? Explain briefly. Required

Month Ticket Revenues Promotional Costs April May $200,000 $52,000 270,000 65,000 June 320,000 80,000 July 480,000 90,000 August September 430,000 100,000 450,000 110,000 October 540,000 120,000 November 670,000 180,000 December 751,000 197,000 She estimates the following regression equation: Ticket revenues = $65,583 + ($3.54 × Promotional costs) 1. Plot the relationship between promotional costs and ticket revenues. Also draw the regression line and evaluate it using the criteria of economic plausibility, goodness of fit, and slope of the regression line. 2. Use the high-low method to compute the function relating promotional costs and revenues. 3. Using (a) the regression equation and (b) the high-low equation, what is the increase in revenues for each $10,000 spent on promotional costs within the relevant range? Which method should Catherine use to predict the effect of promotional costs on ticket revenues? Explain briefly. Required

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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