Louis Katz, a cost accountant at Papalote Plastics, Inc. (PPI), is analyzing the manufacturing costs of a molded plastic telephone handset produced by PPI. Louis's independent variable is production lot size (in 1,000's of units), and his dependent variable is the total cost of the lot (in $100's). Regression analysis of the data yielded the following tables: The correlation coefficient between Louis's variables is ___.
A) -0.73
B) 0.73
C) 0.28
D) -0.28
E) 0.00

Question

Louis Katz, a cost accountant at Papalote Plastics, Inc. (PPI), is analyzing the manufacturing costs of a molded plastic telephone handset produced by PPI. Louis's independent variable is production lot size (in 1,000's of units), and his dependent variable is the total cost of the lot (in $100's). Regression analysis of the data yielded the following tables:   The correlation coefficient between Louis's variables is ___.
A) -0.73 
B) 0.73 
C) 0.28 
D) -0.28 
E) 0.00

Quizplus · Accepted Answer

The correlation coefficient between Louis's variables is 0.73, as shown in the second table. This indicates a moderately strong positive correlation between production lot size and total cost.

Louis Katz, a Cost Accountant at Papalote Plastics, Inc