Question

The following data represent a company's yearly sales volume and its advertising expenditure over a period of 8 years.

Advertising (x)	Sales (y)
400,000	6,000,000
500,000	7,200,000
500,000	8,000,000
660,000	7,500,000
790,000	8,900.000
540,000	8,100,000
420,000	5,900.000
380,000	4,000,000

1. Develop a scatter diagram of sales versus advertising. Include the trendline equation and the coefficient of determination.
2. If the company's advertising expenditure is $315,000, what are the predicted sales?
3. If the company wanted $9,500,000 in sales, what should the advertising budget be?

Answer 1

Copy and paste the data set into excel sheet, then select the data and go to insert, select scatter plot. Right click on chart, select trendline, then select DISPLAY EQUATION ON CHART and DISPLAY R^2 VALUE ON CHART

Regression equation is Sales = 8.9579(advertising) + 2258281.09

(B) setting advertising = 315,000 in the equation, we get

=8.9579*(315000) + 2258281.09

= 5080019.59

(C) setting sales = 9,500,000 in the equation, we get

9,500,000 =8.9579*(Advertising) + 2258281.09

this gives us, 8.9579*(Advertising) = 9,500,000 - 2258281.09

Advertising = $808417.03