TABLE 14-5 A Microeconomist Wants to Determine How Corporate Sales Are Influenced

question 198

Multiple Choice

TABLE 14-5
A microeconomist wants to determine how corporate sales are influenced by capital and wage spending by companies.She proceeds to randomly select 26 large corporations and record information in millions of dollars.The Microsoft Excel output below shows results of this multiple regression.
-Referring to Table 14-5,when the microeconomist used a simple linear regression model with sales as the dependent variable and wages as the independent variable,she obtained an r² value of 0.601.What additional percentage of the total variation of sales has been explained by including capital spending in the multiple regression?

• A)60.1%
• B)31.1%
• C)22.9%
• D)8.8%

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Definitions:

Variable Cost Per Unit

The cost associated with producing one additional unit of a product, which can change depending on the level of production or sales.

Cost Volume Profit Analysis

An accounting technique used to determine how changes in costs and volume affect a company's operating income and net income.

Selling Price Per Unit

The amount of money charged to the customer for one unit of a product or service.

Fixed Expenses

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.