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 between the variables is given by r, which is 0.73 as per the table. As r is positive and close to 1, it indicates a strong positive linear relationship between the production lot size and the total cost of the lot.

Louis Katz,a Cost Accountant at Papalote Plastics,Inc