DrKim Thinks His Regression Equation Is Very Accurate, but He

question 97

Multiple Choice

Dr.Kim thinks his regression equation is very accurate, but he wonders if perhaps the mean is just as good at predicting scores as the regression equation.He knows that the correlation coefficient (r) for the two variables is quite high, -0.82.Should Dr.Kim use the mean or the regression equation to predict scores?

• A) He should use the regression equation because the proportionate reduction in error (r²) is low.
• B) He should use the regression equation because the proportionate reduction in error (r²) is high.
• C) He should use the mean because the proportionate reduction in error (r²) is low.
• D) He should use the mean because the proportionate reduction in error (r²) is high.

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Definitions:

Overapplied Manufacturing Overhead

Occurs when the amount of overhead applied to products or jobs during a period is greater than the actual overhead costs incurred.

Finished Goods Inventory

The value of a company’s inventory of products that are completed and ready for sale.

Underapplied

In accounting, underapplied refers to when the allocated overhead costs are less than the actual overhead costs incurred.

Direct Materials Cost

The expense associated with the raw materials directly used in the production of goods.