Which of the Following Should Be Checked Before Conducting Regression

question 105

Multiple Choice

Which of the following should be checked before conducting regression analysis:
I. The relationship between the cost and cost driver is economically plausible.
II. Data from unusual periods has been eliminated.
III. The number of observations is sufficient.

• A) I only
• B) I and II only
• C) II and III only
• D) I, II, and III

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Definitions:

Multiple-Step Income Statement

An income statement that shows multiple steps in determining net income, including gross profit, operating income, and other incomes and expenses.

Selling Expenses

Costs associated with the selling of a company's goods or services, not including the cost of producing the goods.

Nonoperating Items

Revenue and expenses arising from activities outside of a company's normal business operations, such as investing or financing activities.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.