Final answer:
To predict sales on day 60, substitute 60 into the regression model (îy = 101.32 + 2.48x) resulting in $250,120. For day 90, the same method predicts sales of $324,520. The firm's accounting profit is calculated by subtracting the total costs of $950,000 from the sales revenue of $1,000,000, resulting in a profit of $50,000.
Step-by-step explanation:
The student's question is about predicting credit sales for the first four months of the year using a sales budget. However, the information provided is related to an electronics retailer using regression to predict sales growth for the first quarter of the new year and does not give the specific information needed to answer the student's question about Markham Company. Nonetheless, we can provide an example of how to use the provided model to predict sales.
To predict sales on day 60 using the given model (îy = 101.32 + 2.48x), the steps are as follows:
- Substitute x with 60 into the model.
- Calculate the predicted sales: îy = 101.32 + (2.48 × 60).
- Convert the answer into dollars since the result is in thousands.
For day 60, the predicted sales would be (îy = 101.32 + 148.8) which equals îy = 250.12 or $250,120.
Using the same model for day 90, the steps will be:
- Substitute x with 90 into the model.
- Calculate the predicted sales: îy = 101.32 + (2.48 × 90).
- Convert the answer into dollars since the result is in thousands.
For day 90, the predicted sales would be (îy = 101.32 + 223.2) which equals îy = 324.52 or $324,520.
The question about the firm's accounting profit is separate and can be answered by subtracting the total cost from the sales revenue. The steps are as follows:
- Add up the costs: $600,000 (labor) + $150,000 (capital) + $200,000 (materials) = $950,000.
- Subtract the total costs from the sales revenue: $1,000,000 - $950,000 = $50,000.
Therefore, the firm's accounting profit would be $50,000.