Trey, Inc.is studying marketing cost and sales volume, and has generated the following information by use of a scatter diagram and a least-squares regression analysis: Scatter Regression Diagram Analysis Variable cost per unit sold $ 6.50 $ 6.80 Total monthly ﬁxed cost $45,000 $42,500 Trey is now preparing an estimate for monthly sales of 18,000 units.On the basis of the data presented, compute the most accurate sales forecast possible.
A)$159,500.
B)$162,000.
C)$164,900.
D)$167,400.
E)None of the answers is correct.

Question

Quizplus · Accepted Answer

Using the regression equation:

y = a + bx

where
y = total cost
x = number of units sold

The equation for the given data is:

y = 42500 + 6.80x

Substituting x = 18,000 into the equation, we get:

y = 42500 + 6.80(18000) = 164900

Therefore, the most accurate sales forecast possible is $164,900.

Trey, IncIs Studying Marketing Cost and Sales Volume, and Has Generated