Suppose that a company wishes to predict sales volume based on the amount of adv

Question

Suppose that a company wishes to predict sales volume based on the amount of advertising expenditures. The sales manager thinks that sales volume and advertising expenditures are modeled according to the following linear equation. Both sales volume and advertising expenditures are in thousands of dollars. Estimated Sales Volume=45.47+0.45(Advertising Expenditures) If the company has a target sales volume of $100,000, how much should the sales manager allocate for advertising in the budget? Round your answer to the nearest dollar.

Explanation / Answer

For estimated sales volume = 100 thousand dollars

Hence,

100 = 45.47 + 0.45(Advertising Expenditures)

So,

Advertising expenditures = (100 - 45.47)/0.45 = 121.178 thousand dollars = 121178

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