Question 1

1B3-AT34

Automite company is an automobile replacement parts dealer in a large metropolitan community.

Automite is preparing its sales forecast for the coming year. Data regarding both Automite's and
industry sales of replacement parts as well as both the used and new automobile sales in the
community for the last 10 years have been accumulated.

If Automite wants to determine if there is a historical trend in the growth of its sales as well as the
growth of industry sales of replacement parts, the company would employ:

simulation techniques.

statistical sampling.

time series analysis.

Question 2

1B3-LS43

Maxis Tech is trying to determine how an employee's performance rating could be explained by
his/her level of education (EDU), the length of employment (EMP) with the company, and the
number of training (TRN) hours received.

Using data from 100 of its employees, Maxis Tech performs a regression analysis with the following
results:

Performance rating = 0.2 + 0.32 EDU + 0.15 EMP + 0.07 TRN

R2 = 0.72

t for EDU = 0.013

t for EMP = 3.276

t for TRN = 4.121

The value of these terms in the parentheses (EDU, EMP, and TRN) represent the t-statistics of the
regression coefficient. Which of the following statements best describes the statistical significance of
the impact of the three factors on employee performance ratings?

The impact of all three is statistically significant because the R2 is relatively high.

None of the factors has a statistically significant impact.

Only the impact of number of training hours received is statistically significant because it has
the highest t-statistics.

Both length of employment with the company and number of training hours received have
statistically significant impact because the absolute values of their t-statistics are higher than the
most extreme cutoff point.
Question 3

aq.reg.anal.007_1802

Eight quarters of production data from Pear, Inc., a cell phone manufacturing company, are below.

The regression analysis results on these data are displayed below.

What is the regression equation (total cost equation) for the above information?

Total costs = $1,080(Phones) + $466,096

Total costs = $24,675(Shut Downs) + $309,413

Total costs = $1,080(Phones) + $100,963(Shut Downs) + $466,096

Total costs = $114(Phones) + $24,675(Shut Downs) + $309,413

Question 4

1B3-LS42

In order to determine how its in-house training program is affecting its employees' performance
rating, Maxis Tech performed a regression analysis with the following results:

Performance rating = 0.2 + 0.05 hours of training

R2 = 0.1

Given the above information, Maxis Tech can conclude that:

An employee's performance rating will be 0.35 if the employee receives only one hour of
training.

The number of training hours received has a significant impact on an employee's

performance rating.

There are factors other than number of training hours received that can better explain an
employee's performance rating.

For every hour of training received, an employee's performance rating will decrease by 0.05.

Question 5

1A2-LS01

The regression equation is Y = a + bX. Which of the following is true?

b represents the amount of Y when X = 0.

X represents the dependent variable.

b represents fixed cost per unit.

a represents the amount of Y when X = 0.

Question 6

tb.reg.anal.004_1805

In a simple linear regression equation where units produced is used to predict electricity costs, which
of the following is true?

Units produced is the independent variable and electricity costs is the dependent variable.

Units produced is the dependent variable and electricity costs is the independent variable.

Units produced and electricity costs are both independent variables.

Units produced and electricity costs are both dependent variables.

Question 7

tb.reg.anal.009_1805

Which of the following statements is not true?

A multiple linear regression is likely to be more difficult to interpret than a simple linear
regression model.

A multiple linear regression is likely to be more accurate than a simple linear regression
model.
 A multiple linear regression is likely to be less costly than a simple linear regression model to
develop.

Multi-collinearity can be a problem in multiple linear regression but not in simple linear
regression.

Question 8

aq.reg.anal.001_1802

The CFO of Maureen Systems prepares targets for future years using historical data. However, for the
last two years, the company has failed to achieve the targeted results. In the current year, the board
of directors has employed a team of analysts solely for the preparation of budgets. The new team
uses a forecasted budget to set targets for the future years rather than carrying forward increases in
past results based on historical data. Evaluate the validity of the new team's approach.

The new team's approach is better because the forecasted budget takes into account future
conditions that were not present in past years.

The new team's approach is better because the forecasted budget quantifies the effect of
unexpected adverse circumstances that may hinder achievement of targets.

The new team's approach is not better because the forecasted budget sets targets higher
than previous years.

The new team's approach is not better because the increased historical targets should be the
ideal target as they define and approach the capacity of an entity.

Question 9

tb.reg.anal.005_1805

Which of the following correctly describes the use of the output from a simple linear regression
analysis?

The coefficient of the “intercept” is the estimate of variable amount per unit of the
independent variable and the coefficient on the independent variable is the estimate of the fixed
component of the dependent variable.

The coefficient of the “intercept” is the estimate of the fixed component of the dependent
variable and the coefficient on the independent variable is the estimate of variable amount per unit
of the independent variable.

The coefficient of the “intercept” is the estimate of the total amount of the dependent
variable and the coefficient on the independent variable is the estimate of the variable amount per
unit of the independent variable.

The coefficient of the “intercept” is the estimate of the fixed component of the dependent
variable and the coefficient on the independent variable is the estimate of the amount of variability
explained by the regression equation.

Question 10

tb.reg.anal.003_1805
In a simple linear regression equation where advertising expenditures is used to predict sales, which
of the following is true?

Advertising expenditures is the independent variable and sales is the dependent variable.

Advertising expenditures is the dependent variable and sales is the independent variable.

Advertising expenditures and sales are both independent variables.

Advertising expenditures and sales are both dependent variables.

Question 11

1A2-LS12

A time series analysis shows that sales normally have been rising but last year there was a big drop.
Analysts believe that the drop was due to massive regional fires that hurt business. This is an
example of:

a seasonal pattern.

a cyclical pattern.

a trend line.

an irregular component.

Question 12

1A2-LS08

A time series analysis:

is an objective function with time as the dependent variable.

is a regression analysis with time as the independent variable.

is an objective function with time as the independent variable.

is a regression analysis with time as the dependent variable.

Question 13

1B3-AT35

Automite company is an automobile replacement parts dealer in a large metropolitan community.

Automite is preparing its sales forecast for the coming year. Data regarding both Automite's and
industry sales of replacement parts as well as both the used and new automobile sales in the
community for the last 10 years have been accumulated.

If Automite wants to determine if its sales of replacement parts are patterned after the industry sales
of replacement parts or to the sales of used and new automobiles, the company would employ:

correlation and regression analysis.

time series analysis.

 simulation techniques.

statistical sampling.

Question 15

tb.reg.anal.012_1805

Sophia Company performed a regression analysis on its customer service costs for the previous 12
months. The number of orders during those 12 months ranged from 5,000 orders to 12,000 orders
and the customer service costs ranged from $120,000 to $300,000. The regression analysis yielded
an intercept of $30,000, a coefficient on orders of $22, and an R-squared of 91.3%. If Sophia expects
to have 9,000 orders in the next month, what would Sophia estimate total customer service costs to
be?

$228,000

$210,000

$198,000

$294,000

Question 17

tb.reg.anal.002_1805

Jamie's Jams conducted a regression analysis on its shipping costs for the last year, which resulted in
the following equation: $3.25x + $115. If Jamie plans to ship 287 pints of jam next month, what are
the shipping costs expected to be?

$1,047.75

$932.75

$817.75

$118.25

Question 18

1B3-AT24

Regression analysis:

encompasses factors outside the relevant range.

estimates the dependent cost variable.

uses probability assumptions to determine total project costs.

estimates the independent cost variable.

Question 19

1B3-LS51

Dawson Manufacturing developed the following multiple regression equation, utilizing many years of
data, and uses it to model, or estimate, the total cost of its product.

Cost = FC + L(A) + M(B)

Where:

FC = total fixed costs

L = labor rate per hour

A= number of labor hours in the product

M = material cost per pound

B = number of machine hours in the product

Which one of the following changes would have the greatest impact on invalidating the results of this
model?

A significant reduction in factory overheads, which are a component of fixed costs

A large drop in material costs, as a result of purchasing the material from a foreign source

A significant change in the design of the product

Renegotiation of the union contract calling for much higher wage rates

Question 20

1B3-LS49

A company has accumulated data for the last 24 months in order to determine if there is an
independent variable that could be used to estimate shipping costs. Three possible independent
variables being considered are packages shipped, miles shipped, and pounds shipped. The
quantitative technique that should be used to determine whether any of these independent
variables might provide a good estimate for shipping costs is:

flexible budgeting.

linear programming.

variable costing.

linear regression.

Question 21

tb.reg.anal.011_1805

Connor's Shirt Shop performed a regression analysis on its delivery costs for the previous 12 months.
The number of deliveries during those 12 months ranged from 10,000 deliveries to 15,000 deliveries.
The regression analysis yielded an intercept of $9,000, a coefficient on deliveries of $3.50, and an R-
squared of 92.6%. If Connor expects to make 14,000 deliveries in the next month, what would
Connor estimate total delivery costs to be?

$53,708

$44,000

$49,000

$58,000

Question 24

1A2-LS11

A time series analysis shows that sales have risen steadily over the last ten years. This is an example
of:

a trend line.

a cyclical pattern.

an irregular pattern.

a seasonal pattern.

Question 26

tb.reg.anal.008_1805

How does a multiple linear regression equation differ from a simple linear regression equation?

More than one independent variable is used to predict a dependent variable in a multiple
linear regression equation but only one independent variable is used to predict a dependent variable
in a simple linear regression equation.

More than one dependent variable is predicted by a multiple linear regression equation but
only one dependent variable is predicted in a simple linear regression equation.

A multiple linear regression is likely to be less accurate than a simple linear regression model.

A multiple linear regression is likely to be less difficult to interpret than a simple linear
regression model.

Question 27

1B3-CQ07

In order to analyze sales as a function of advertising expenses, the sales manager of Smith Company
developed a simple regression model. The model included the following equation, which was based
on 32 monthly observations of sales and advertising expenses with a related coefficient of
determination of 0.90.

S = $10,000 + $2.50A

S = sales
A = advertising expenses

If Smith Company's advertising expenses in one month amounted to $1,000, the related point
estimate of sales would be:

$12,500.

$10,000.

$2,500.

$11,250.

Question 30

1B3-LS48

For cost estimation simple regression differs from multiple regression in that simple regression uses
only:

dependent variables, while multiple regression can use both dependent and independent
variables.

one independent variable, while multiple regression uses more than one independent
variable.

one dependent variable, while multiple regression uses more than one dependent variable.

one dependent variable, while multiple regression uses all available data to estimate the cost
function.

Question 33

1B3-CQ08

The results of regressing Y against X are as follows.

When the value of X is 10, the estimated value of Y is:

53.84.

20.63.

15.23.

16.77.

Question 34
1B3-LS36

ABC Company has run a regression analysis and determined that sales are related to marketing costs.
The regression formula the analysts have calculated is Y = $5,000,000 + $125(x), where Y = sales and
x = marketing costs. Use the regression formula to determine what the annual sales will be if
marketing expenditures are $1,000,000.

$6,000,000

$5,000,000

$130,000,000

$125,000,000

Question 35

tb.reg.anal.001_1805

Gill's Golf Gear (GGG) conducted a regression analysis on its shipping costs for the last year, which
resulted in the following equation: $2.30x + $375. If GGG plans to ship 320 boxes of golf balls next
month, what are the shipping costs expected to be?

$377.30

$736.00

$862.50

$1,111.00

Eight quarters of production data from Pear, Inc., a cell phone manufacturing
company, are below.

The regression analysis results on these data are displayed below.

What is the regression equation (total cost equation) for the above information?
Total costs = $147(Phones) + $356,978

Total costs = $1,473,119(Phones) + 738

Total costs = $356,978(Phones) + $147

Total costs = $738(Phones) + $1,473,119

A time series analysis of a business's sales show a decline in sales every summer, with a peak during
the winter. These results could be:

a downward trend.

seasonal fluctuations.

cyclical fluctuations.

an upward trend.

High Concept Fashion is planning its next advertising campaign to coincide with its store expansion in
the following months. Using information from the past few years, the company was able to perform
a regression analysis with the following results:

Sales revenue = $200,000 + 15(Advertising budget)

R2 = 0.85

The company's advertising budget over the last few years usually fell between the range of $10,000
and $15,000 a year. It plans on spending $50,000 this year as a result of its expansion. Given its new
advertising budget, High Concept Fashion should expect:

Unable to make any prediction because the new budget lies outside the range of the sample
used to estimate the regression equation.

$950,000 in sales revenue.

$200,000 in sales revenue.

$750,000 in sales revenue.

Dawson Manufacturing developed the following multiple regression equation, utilizing many years of
data, and uses it to model, or estimate, the cost of its product.
Cost = FC + a × L + b × M

Where:

FC = fixed costs

L = labor rate per hour

M = material cost per pound

Which one of the following changes would have the greatest impact on invalidating the results of this
model?

Renegotiation of the union contract calling for much higher wage rates.

Large drop in material costs, as a result of purchasing the material from a foreign source.

A significant change in labor productivity.

A significant reduction in factory overheads, which are a component of fixed costs.

Ben's Toy Shop performed a regression analysis on its shipping costs for the previous 12 months. The
number of units shipped during those 12 months ranged from 1,500 units to 2,150 units. The
regression analysis yielded an intercept of $10,000, a coefficient on units shipped of $25, and an R-
squared of 94.2%. If Ben expects to ship 1,800 units in the next month, what would Ben estimate
total shipping costs to be?

$51,810

$55,000

$45,000

$63,750