Question: A company's sales [in million units], selling expenses [in $million], and price [in $/unit] data are provided in the table below.
[A] Forecast the company's sales if the company increases its selling expenses to $10 million and its price to $8.5/unit.
[B] Calculate the sample regression line, where sales is the dependent variable and selling expenses and price are the independent variable.
[C]If the company's objective is maximizing net revenue (total revenue minus selling expenses), which of the three following options should be accepted:
(a) increase selling expenses to $10 million and price to $8.5/unit,
(b) increase selling expenses to $10 million and price to $9.0/unit, and
(c) increase selling expenses to $11 million and price to $8.5/unit.
|
Millions of units (Y)
|
$ million (X1)
|
$ (X2)
|
|
Sales
|
Selling expense
|
Price
|
|
6000
|
2
|
0.00
|
|
4000
|
1
|
1.00
|
|
16000
|
8
|
2.00
|
|
10000
|
5
|
3.00
|
|
12000
|
6
|
4.00
|
|
8000
|
4
|
5.00
|
|
12000
|
7
|
6.00
|
|
16000
|
9
|
7.00
|
|
14000
|
8
|
8.00
|