Hill Top Products has run a regression analysis for utilities costs and the total production 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 percent of the company's total costs are utilities costs. B) 14 percent of the variation in utilities costs is explained by the increase or decrease in production. C) 86 percent of the variation in utilities costs is explained by the increase or decrease in production. D) 86 percent of the company's total costs are fixed costs and the remaining 14 percent are variable costs.

Question

Quizplus · Accepted Answer

R² is the symbol used to represent R squared in regression analysis. R squared represents the amount of variation in the dependent variable (utilities costs) that is explained by the independent variable (total production). An R squared of .86 means that 86% of the variation in utilities costs can be explained by the increase or decrease in production.

Hill Top Products Has Run a Regression Analysis for Utilities