Question Two partners who own Progressive Business Solutio

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.

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 follows:Dependant Variable: E

Observation: 15

Variable Intercept: N

Parameter Estimate: 2504200.00

32.31

R-Square 0.8311

Standard Error 20121000.000

8.54

F-Ratio 63.96

T-Ratio 1.24

3.78

P-Value on F 0.0001

P-Value 0.2369

0.0023

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?

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