Victoria is a budget analyst at Young Industries. She used the least squares regression method to separate the plant's monthly utilities cost into its fixed and variable components. The results were as follows: Y = 3,250 + .054 X X = the number of units produced R2 = .892 How should Victoria interpret the R2 of .892?

a. The equation is a better predictor of fixed costs than of variable costs 89.2% of the time.
b. The equation will accurately predict utility costs 89.2% of the time.
c. Fixed costs make up 89.2% of the total semi-variable cost in any given month.
d. The number of units produced explains 89.2% of the variation in the plant utilities cost.


d

Business

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