Question

When attempting to determine a cost formula for mixed-costs, regression analysis can be used. When considering if the projected line is a “good fit,” the coefficient of determination or R2 is evaluated. A coefficient of determination of 0.88 suggests that: A. 88% of the variation in the dependent variable is explained by the changes in the independent variable(s) B. 88% of the variation in the dependent variable is explained by the changes in factors other than the chosen independent variables C. 0.88% of the variation in the dependent variable is explained by the changes in the independent variable(s) D. 0.88% of the variation in the dependent variable is explained by the changes in factors other than the chosen independent variables

Answer #1

Option B. 88% of the Variation in dependent variable is explained by the change in factors other than the choosen independent variables.

Explanation :regression analysis is used to explain the relationship among two or more variables. for example sales to selling price and relationship among varable , fixed and total costs

The algebraic formula for mixed cost is as follows

Y= a+bx

In this formula

Y= total cost

a= fixed cost

b= variable cost per unit

x =units produced

values and b are constants

x is the changing independent factor

y is the changing dependent factor.

In the above equation.if you change the units produced , total cost and varable costs changes but fixed cost doesn't and variable cost per unit doesn't changed

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