Question:

Accountants at Walker and Walker believe 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 last year then developed the following regression equation relating expected travel costs (Y) to the number of days on the road (X ₁ ) and the distance traveled (X ₂ ) in miles.

Y= $90.00 + $48.50X ₁ + $0.40X ₂

The coefficient of correlation computed was 0.68.

1. If Thomas Williams returns from a 300mile trip that took him out of town for 5 days, what is the expected amount 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?

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document