Statistics Solutions

(See Steps) Accountants at the firm Walker and Walker believed that several traveling executives submit unusually high travel vouchers when they return

Question: Accountants at the firm Walker and Walker believed that several traveling executives submit unusually high travel vouchers when they return from business trips. The accountants took a sample of 200 vouchers submitted from the past year; they then developed the following multiple regression equation relating expected travel cost (Y) to number of days on the road ( \({{x}_{1}}\) ) and distance traveled ( \({{x}_{2}}\) ) in miles:

\[\hat{Y}=90.00+48.50{{x}_{1}}+0.40{{x}_{2}}\]

The coefficient of correlation computed was 0.68.

  1. If Thomas Williams returns from a 300-mile trip that took him out of town for five days, what is the expected amount that he should claim as expenses?
  2. Williams submitted a reimbursement request for $685; what should the accountant do?
  3. Comment on the validity of this model. Should any other variables be included? Which ones? Why?

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