Accountants at the Tucson firm, Larry Youdelman, CPAs, believed that several traveling executives were submitting unusually high travel vouchers when they returned from business trips. First, they took a sample of 200 vouchers submitted from the past year. Then they developed the following multiple-regression equation relating expected travel cost to number of days on the road ( x1 ) and distance traveled ( x2 ) in miles:
y= $90.00 + $48.50x1 + $40x2
The coefficient of correlation computed was .68.
a) If Donna Battista returns from a 300-mile trip that took her out of town for 5 days, what is the expected amount she should claim as expenses?
b) Battista submitted a reimbursement request for $685. What should the accountant do?
c) Should any other variables be included? Which ones? Why