Ashford BUS 640 Week 2 Discussions

Two partners who own Progressive Business Solutions, which currently
operates out of an office in a small town near Boston, just discovered a
vacancy in an office building downtown Boston. One of the partners favors
moving downtown because she believes the additional business gained by moving
downtown will exceed the higher rent at the downtown location plus the cost of
making the move. The other partner at PBS opposes moving downtown. He argues,
“We have already paid for the office stationary, business cards, and a huge
sign that cannot be moved or sold. We have spent so much on our current office
that we cannot afford to waste this money by moving now.” Evaluate the second
partner’s advice not to move downtown. Illustrate and fully explain using an example
of relevant cost (a cost whose value does affect the optimal decision) and an
example of irrelevant cost (a cost whose value does not affect the optimal
decision) to the business regarding this decision..85pt; font-size: 11px;”>.85pt; font-size: 11px;”>A
security analyst specializing in the stocks of the motion picture industry the
relation between the number of movie theater tickets sold in December and the
annual level of earnings in the motion picture industry. Time-series data for
the last 15 years are used to estimate the regression model. E = a + bN where E
is total earnings of the motion picture industry measured in dollars per year
and N is the number of tickets sold in December. The regression output is as.85pt; font-size: 11px;”>
.85pt; font-size: 11px;”>follows:.15pt;mso-add-space:
auto;text-indent:33.85pt;line-height:200%”>Dependant Variable: EObservation: 15Variable Intercept: NParameter Estimate: 2504200.0032.31R-Square 0.8311Standard Error 20121000.0008.54F-Ratio 63.96T-Ratio 1.243.78P-Value on F 0.0001P-Value 0.23690.0023
How
well do movie tickets sales in December explain the level of earnings for the
entire year? Present statistical evidence to support your answer. Also, sales
of movie tickets in December are expected to be approximately 950,000.
According to this regression analysis, what do you expect earnings for the year
to be? Prior to this analysis, the estimates for earnings in December are $48
million. Is this evidence strong enough for you to consider improving the
current recommendation for the motion picture industry?