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Bob's Bowlarama performed a linear regression analysis on the monthly cost of operating its concession stand, using the number of customers serviced as the cost driver. The results were as follows:

-The cost equation is:
A)Y = $4.35X + $1,457.80
B)Y = ($4.35 + $.23)X - $.76Z
C)$1,457.80 = $4.35X + $.76Y
D)$4.35Y = ($.23 + $.76)X - $1,457.80

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Bob's Bowlarama performed a linear regression analysis on the monthly cost of operating its concession stand, using the number of customers serviced as the cost driver. The results were as follows:
 
-The cost equation is:
A)Y = $4.35X + $1,457.80 
B)Y = ($4.35 + $.23)X - $.76Z 
C)$1,457.80 = $4.35X + $.76Y 
D)$4.35Y = ($.23 + $.76)X - $1,457.80

Quizplus · Accepted Answer

The linear regression results show that the cost equation is Y = $4.35X + $1,457.80. This means that for every additional customer serviced, the monthly cost of operating the concession stand increases by $4.35. The fixed cost of operating the concession stand, represented by the intercept, is $1,457.80. Choice B includes an additional variable Z that is not mentioned in the problem. Choice C rearranges the equation in a way that does not accurately represent the relationship between the cost and the cost driver. Choice D incorrectly combines the coefficients of X and Z and gives the fixed cost as a negative value. Therefore, the best choice is A.

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