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Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are Interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year's operations (revenues and costs In thousands of dollars). Costs $4,214 2,894 5,181 3,998 3,676 3,319 5,029 2,374 4,688 2,959 4,179 3,200 2,556 4,655 Store Revenues $4, 100 2,227 5,738 3,982 2,914 4,023 6,894 1,779 5,416 3,228 3,886 4,690 3,552 4,817 101 102 103 104 105 106 107 108 109 110 111 112 113 114

Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are Interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year's operations (revenues and costs In thousands of dollars). Costs $4,214 2,894 5,181 3,998 3,676 3,319 5,029 2,374 4,688 2,959 4,179 3,200 2,556 4,655 Store Revenues $4, 100 2,227 5,738 3,982 2,914 4,023 6,894 1,779 5,416 3,228 3,886 4,690 3,552 4,817 101 102 103 104 105 106 107 108 109 110 111 112 113 114

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter10: Forecasting Financial Statement
Section: Chapter Questions
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Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year's operations (revenues and costs In thousands of dollars). Store Revenues Costs $4,100 2,227 5,738 3,982 2,914 4,023 6,894 1,779 5,416 3,228 3,886 4,690 101 $4,214 2,894 5,181 3,998 3,676 3,319 5,029 2,374 4,688 2,959 4,179 3, 200 2,556 4,655 2,986 102 103 104 105 106 107 108 109 110 111 112 113 3,552 4,817 2,124 114 115 Simple regression results from the data of Davis Stores are as follows. Equation: Store costs = $1,604.40 + (Revenue x 53.6%) Statistical data Correlation coefficient 0.835 R2 0.698 Requlred: a. Estimate store costs for a store with revenue of $2.5 million. b. What percentage of the variation in store costs is explained by the independent variable? Complete this question by entering your answers in the tabs below. Required A Required B Estimate store costs for a store with revenue of $2.5 million. (Enter the answer in thousands of dollars. Round your answer to 2 decimal places.) Store cost
Transcribed Image Text:Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year's operations (revenues and costs In thousands of dollars). Store Revenues Costs $4,100 2,227 5,738 3,982 2,914 4,023 6,894 1,779 5,416 3,228 3,886 4,690 101 $4,214 2,894 5,181 3,998 3,676 3,319 5,029 2,374 4,688 2,959 4,179 3, 200 2,556 4,655 2,986 102 103 104 105 106 107 108 109 110 111 112 113 3,552 4,817 2,124 114 115 Simple regression results from the data of Davis Stores are as follows. Equation: Store costs = $1,604.40 + (Revenue x 53.6%) Statistical data Correlation coefficient 0.835 R2 0.698 Requlred: a. Estimate store costs for a store with revenue of $2.5 million. b. What percentage of the variation in store costs is explained by the independent variable? Complete this question by entering your answers in the tabs below. Required A Required B Estimate store costs for a store with revenue of $2.5 million. (Enter the answer in thousands of dollars. Round your answer to 2 decimal places.) Store cost
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