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 (X₁) and the distance traveled (X₂) in miles.

Y = $90.00 + $48.50X₁ + $0.40X₂

The coefficient of correlation computed was 0.68.

a. 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?

b. Williams submitted a reimbursement request for $685; what should the accountant do?

c. Comment on the validity of this model. Should any other variables be included? Which ones? Why?