Randle Company ran a regression analysis comparing total units of production and maintenance costs for the past four months.The regression analysis shows an R-squared of 0.76.Which of the following statements best describes this measure?
A)76 percent of the total maintenance costs are fixed and 24 percent are variable.
B)76 percent of the variation in maintenance costs is not explained by the increase or decrease in production.
C)76 percent of the variation in maintenance costs is explained by the increase or decrease in production.
D)76 percent of the company's total costs are maintenance costs.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

R-squared is a statistical measure that represents the proportion of the variance for a dependent variable (in this case, maintenance costs) that's explained by an independent variable (in this case, units of production). Therefore, choice C, which states that 76% of the variation in maintenance costs is explained by the increase or decrease in production, is the most accurate description of the R-squared value of 0.76.

Randle Company Ran a Regression Analysis Comparing Total Units of Production