The Business School at Eastern College is accumulating data as a first step in the preparation of next year's budget development.One cost that is being looked at closely is administrative costs as a function of student credit hours.Data on administrative costs and credit hours for the past thirteen months are shown below: The controller's office has analyzed the data and has given you the results from the regression analysis: The percent of the total variance that can be explained by the regression is:
A)93.3%.
B)87.1%.
C)85.9%.
D)96.6%.

Question

The Business School at Eastern College is accumulating data as a first step in the preparation of next year's budget development.One cost that is being looked at closely is administrative costs as a function of student credit hours.Data on administrative costs and credit hours for the past thirteen months are shown below:  The controller's office has analyzed the data and has given you the results from the regression analysis:  The percent of the total variance that can be explained by the regression is:
A)93.3%. 
B)87.1%. 
C)85.9%. 
D)96.6%.

Quizplus · Accepted Answer

The R-squared value in the regression analysis is 0.871, which means that the regression model explains 87.1% of the total variation in administrative costs as a function of student credit hours. Therefore, the best choice is B.

The Business School at Eastern College Is Accumulating Data as a First