Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver.The output of regression analysis showed the following information:
Intercept Coefficient = 89,620
X Variable 1 Coefficient = 62.53
R-square = 0.9852
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Should your client use this information to predict monthly operating costs?
A)Yes,because R-square is so high.
B)No,because R-square is so high.
C)Yes,because regression analysis can be relied upon.
D)There is not enough information to make this prediction.

Question

Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver.The output of regression analysis showed the following information: 
Intercept Coefficient = 89,620
X Variable 1 Coefficient = 62.53
R-square = 0.9852
- 
Should your client use this information to predict monthly operating costs?
A)Yes,because R-square is so high.
B)No,because R-square is so high.
C)Yes,because regression analysis can be relied upon.
D)There is not enough information to make this prediction.

Quizplus · Accepted Answer

A high R-square indicates a strong linear relationship between the cost driver (X variable) and the monthly operating costs. Therefore, the regression model can be relied upon to predict monthly operating costs based on the given cost driver.

Your Client's Company Wants to Determine the Relationship Between Its