The Residuals Plot for a Linear Model Is Shown

question 35

Multiple Choice

The residuals plot for a linear model is shown. Which is true?

• A) The linear model is no good since some residuals are large.
• B) The linear model is no good because of the curve in the residuals.
• C) The linear model is okay because the association between the two variables is fairly strong.
• D) The linear model is okay because approximately the same number of points are above the line as below it.
• E) The linear model is no good since the correlation is near 0.

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Definitions:

Weighted-Average Method

An inventory costing method where costs of goods are calculated based on the weighted average of the costs of similar items.

Process Costing System

A method of costing used where identical or highly similar goods are produced, assigning costs to units of product based on the process they undergo.

Weighted-Average Method

An inventory costing method that averages the cost of goods available for sale and assigns the average cost to both the cost of goods sold and remaining inventory.

Equivalent Units

Equivalent units are a concept in cost accounting used to compute the number of units that could have been completed given the amount of work done, taking partially completed units into account.