Louis Katz,a cost accountant at Papalote Plastics,Inc.(PPI),is analyzing the manufacturing costs of a moulded 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 moulded 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 the variables is given by r = -0.73 in the table. As it is negative, there is an inverse relationship between lot size and total cost. The absolute value of 0.73 indicates a moderate to strong negative correlation between the variables. Thus, option B is the correct answer.

Louis Katz,a Cost Accountant at Papalote Plastics,Inc