Motormart Case Study

Use Table 6 to compute the cost equations and R-squared measures for each of the remaining eight expenses and total expenses. Notice that there???s a computed total requirement in the table. This just means that you must total these two columns and compare the computed totals to the Excel generated measures in the row below. In effect, you???re being asked to comment on whether the separate cost formulas are ???additive.???

Table 6

??

Column

Expense

FC

VC

r-sq

1

Salaries

$106,866

???$110

4.10%

2

Vacation

??

??

??

3

Advertising and training

??

??

??

4

Supplies/tools/laundry

??

??

??

5

Freight

??

??

??

6

Vehicles

??

??

??

7

Demonstrators

??

??

??

8

Floor planning

??

??

??

??

Computed total

??

??

??

9

Total

??

??

??

??

Complete the cost equations for the table. Use the R-squared as the single measure of ???goodness of fit.??? Don???t attempt to improve your results with the elimination of ???outliers??? or ???influential outliers.???

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