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Kate Coughlin, owner of Rose Red, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee, Coughlin wants to set the delivery fee based on the distance driven to deliver the flowers. Coughlin wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. Rose Red does a regression analysis on the next year's data using Excel. The output generated by Excel is as follows: (Click the icon to view the regression analysis.) Read the requirements Requirement 1. Determine the firm's cost equation (use the output from the Excel regression). (Enter amounts to two decimal places.) y = X + Regression analysis A D E F G X Requirements 0.92 1 SUMMARY OUTPUT 2 Regression Statistics 3 Multiple R 4 R Square 5 Adjusted R Square 6 Standard Error 0.84 1. Determine the firm's cost equation (use the output from the Excel regression). 2. Determine the R-squared (use the output from the Excel regression). What does Rose Red's R-squared indicate? 3. Predict van operating costs at a volume of 17,000 miles assuming the company would use the cost equation from the Excel regression regardless of its R-squared. Should the company rely on this cost estimate? Why or why not? 0.81 148.38 7 Observations 7 8 ANOVA 9 df SS MS F Significance F 0.0038 10 Regression 1 573.116.90 573,116.90 26.03 Print Done 11 Residual 5 110,083.10 22.016.62 12 Total 6 683,200.00 13 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% 3,337.42 1,263.34 806.85 1.57 0.18 14 Intercept 15 X Variable 1 -810.75 0.13 0.26 0.05 5.10 0.00 0.39

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