A regression of total selling expenses against number of units sold yields an intercept of 178,024 and a slope of 12.3. This indicates that:
A) Total fixed selling expenses are predicted to be $178,024
B) Variable selling expenses are predicted to be $12.30/unit
C) Total selling expenses are predicted to be $190,324 when 1000 units are sold
D) All of the above

Question

Quizplus · Accepted Answer

The intercept in a regression equation represents the value of the dependent variable when the independent variable is zero, indicating fixed expenses here. The slope indicates the change in the dependent variable for a one-unit change in the independent variable, representing variable expenses per unit. The total selling expenses for 1000 units can be calculated by plugging the value into the regression equation: 178,024 + 12.3 * 1000 = $190,324.

A Regression of Total Selling Expenses Against Number of Units