A Variable That Takes on the Values of 0 or 1

question 21

Multiple Choice

A variable that takes on the values of 0 or 1 and is used to incorporate the effect of qualitative variables in a regression model is called a(n) _____.

• A) interaction
• B) constant variable
• C) dummy variable
• D) None of the answers is correct.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to products based on a predetermined formula.

Variable Manufacturing Overhead

Costs that vary proportionally with manufacturing activity, such as indirect materials and utilities.

Markup

The amount added to the cost of goods to cover operating expenses and profit, expressed as a percentage of cost.

Direct Labor-Hours

Direct labor-hours refer to the total hours worked by employees directly involved in the production process, used as a basis for allocating labor costs to products.