Louis Katz,a cost accountant at Papalote Plastics,Inc.(PPI),is analyzing the manufacturing costs of a molded 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 molded 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 is the square root of the coefficient of determination (R-squared), which is provided in the second table as 0.5329. Taking the square root of this value gives us 0.73, indicating a strong positive correlation between lot size and total cost.

Louis Katz,a Cost Accountant at Papalote Plastics,Inc