Question

The Transactional Records Access Clearinghouse at Syracuse University reported data showing the chance of an Internal Revenue Service (IRS) audit. The data in file IRSAudit.xlsx show the average adjusted gross income reported (in $ thousands) and the percent of the returns that were audited for 20 selected IRS districts.

District	Adjusted Gross Income	Percent Audited
Los Angeles	36.664	1.3
Sacramento	38.845	1.1
Atlanta	34.886	1.1
Boise	32.512	1.1
Dallas	34.531	1.0
Providence	35.995	1.0
San Jose	37.799	0.9
Cheyenne	33.876	0.9
Fargo	30.513	0.9
New Orleans	30.174	0.9
Oklahoma City	30.060	0.8
Houston	37.153	0.8
Portland	34.918	0.7
Phoenix	33.291	0.7
Augusta	31.504	0.7
Albuquerque	29.199	0.6
Greensboro	33.072	0.6
Columbia	30.859	0.5
Nashville	32.566	0.5
Buffalo	34.296	0.5

1. Use XLSTAT to compute a 95% confidence interval for the average percent audited of districts with an average adjusted gross income of $35,000. Interpret the interval in the context of the application.

Hint: Enter “35000” into cell B22 in the IRSAudit worksheet. Then, follow the XLSTAT directions in part (b) but before clicking “OK,” click the “Prediction” tab and select cell B22 for “X / Explanatory variables: Quantitative.” You will find the 95% confidence interval at the bottom of the XLSTAT regression output under “Lower bound 95% (Mean)” and “Upper bound 95% (Mean).”

2. Use XLSTAT to compute a 95% prediction interval for the percent audited of an individual district with an average adjusted gross income of $35,000. Interpret the interval in the context of the application.

Hint: You will find the 95% prediction interval at the bottom of the XLSTAT regression output under “Lower bound 95% (Observation)” and “Upper bound 95% (Observation).”

3. Use the regression output in XLSTAT to calculate the coefficient of determination, r2r2 from the sum of squares due to regression (SSR) and the total sum of squares (SST). Interpret your calculated value of r2r2 in the context of the application.

Hint: Find SSR and SST in the Analysis of variance table in the XLSTAT regression output. You can check your calculation by locating “R²“ in the regression output.

Answer 1

The attach image details solution given below

Interpretation: The R -square =0.2170 that is means that average adjusted gross income 21.70% explain variation of income percentage Auditation

p-value=0.038 and alpha=0.05 then alpha>p-value

we can say that average adjusted gross income variable is significance at 5% of level of significance.