Linear regression analysis

1. Is an R square of 0.9 good? Why or why not?

2. Explain how to use the output of linear regression analysis to define the cost (or revenue) line.

3. What are the advantages and disadvantages of using linear regression analysis to define cost (or revenue) lines?

Leasure Locks is a hair styling salon. The following is a list of costs connected with the salon. Identify each of the costs as variable, fixed, or mixed. Assume that activity is measured as the number of customers. Use V for variable, F for fixed, and M for mixed.

________ A. Hair products sold to customers

________ B. Computer costs for inventory maintenance

________ C. Stylists’ wages and commissions

________ D. Hair dryers

________ E. Combs, brushes, and miscellaneous hair supplies

________ F. Perming solution

________ G. Laundry service for towels and gowns

________ H. Shampoo and rinse

________ I. Utilities: water, electricity, and heat

________ J. Rent on the facilities

Solution:

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