Hill Top Products has run a regression analysis comparing total production and utilities' costs for the past six months.The regression analysis shows an R square (R²)of .86.Which of the following statements best describes the meaning of R²? A) 86 per cent of the company's total costs are utilities costs. B) 86 per cent of the variation in utilities costs is not explained by the increase or decrease in production. C) 86 per cent of the variation in utilities costs is explained by the increase or decrease in production. D) 86 per cent of the company's total costs are fixed costs and the remaining 14 per cent are variable costs.

Question

Quizplus · Accepted Answer

The R square value of 0.86 shows that 86% of the variation in the utilities' costs is explained by the increase or decrease in production. It does not provide any information about the percentage of total costs that are utilities costs or the breakdown of fixed and variable costs.

Hill Top Products Has Run a Regression Analysis Comparing Total