Use the following information to answer the next question(s).
The method of least squares produced the following computer printout using direct labour hours as the activity.

-The coefficient of determination costs is
A) 0.73.
B) 0.81.
C) 0.90.
D) 1.00.

Question

Use the following information to answer the next question(s).
The method of least squares produced the following computer printout using direct labour hours as the activity.
 
-The coefficient of determination costs is
A) 0.73. 
B) 0.81. 
C) 0.90. 
D) 1.00.

Quizplus · Accepted Answer

The coefficient of determination, denoted by R-squared, measures the proportion of variability in the dependent variable (costs in this case) that is explained by the independent variable (direct labor hours). From the given computer printout, we can see that R-squared is 0.81. This means that 81% of the variation in costs is explained by the variation in direct labor hours. Therefore, the best choice is B, which corresponds to R-squared value of 0.81.

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