Assume that the management of Dairy Deli wants to expand operations.To help evaluate the risks involved in opening an additional store,the company president wants to know the amount of fixed cost a new store will likely incur.Management uses the regression method to analyze the company's mixed costs.In terms of interpreting the results: A) a low R² statistic suggests that the independent value (units sold) more strongly influences the dependent variable (total cost). B) the R² statistic represents the percentage of change in the independent variable (units sold) that is explained by a change in the independent variable (total cost). C) the R² statistic represents the percentage of change in the dependent variable (total cost) that is explained by a change in the independent variable (units sold). D) the R² statistic is not a good measure of reliability.

Question

Quizplus · Accepted Answer

The R² statistic represents the percentage of change in the dependent variable (total cost) that is explained by a change in the independent variable (units sold). This means that a higher R² statistic indicates a stronger relationship between the two variables and can help management estimate the amount of fixed cost a new store will likely incur based on the expected level of units sold. Choices A, B, and D are incorrect.

Assume That the Management of Dairy Deli Wants to Expand