Rushmont, Inc. operates a small package delivery service in the Nashville suburbs. If the company uses a regression equation to forecast total operating costs, the coefficient of the equation's independent variable would correspond to the:
A) variable operating cost per delivery.
B) fixed operating costs.
C) number of deliveries.
D) total variable operating costs.
E) total operating costs.

Question

Quizplus · Accepted Answer

The coefficient of the independent variable in a regression equation used to forecast total operating costs represents the variable operating cost per delivery. This is because the coefficient reflects how much the dependent variable (total operating costs) changes with a one-unit change in the independent variable (number of deliveries), which directly corresponds to the variable cost per delivery.