Choose the One Alternative That Best Completes the Statement or Answers

question 4

Multiple Choice

Choose the one alternative that best completes the statement or answers the question.
-A manufacturer of boiler drums wants to use regression to predict the number of man-hours needed to erect drums in the future. The manufacturer collected a random sample of 35 boilers and measured the following two variables:
MANHRS: $y$ = Number of man-hours required to erect the drum
PRESSURE: $\mathrm { x } _ { 1 } =$ Boiler design pressure (pounds per square inch, i.e., psi)
Initially, the simple linear model $\mathrm { E } ( \mathrm { y } ) = \beta _ { 1 } + \beta _ { 1 \mathrm { x } 1 }$ was fit to the data. A printout for the analysis appears below:
UNWEIGHTED LEAST SQUARES LINEAR REGRESSION OF MANHRS
$\begin{array}{c|c|c|c|c}\text { PREDICTOR } & & & & \\\text { VARIABLES } & \text { COEFFICIENT } & \text { STD ERROR } & \text { STUDENT'ST } & \mathrm{P} \\\hline \text { CONSTANT } & 1.88059 & 0.58380 & 3.22 & 0.0028 \\\text { PRESSURE } & 0.00321 & 0.00163 & 2.17 & 0.0300\end{array}$

$\begin{array} { l l l l } \text { R-SQUARED } & 0.4342 & \text { RESID. MEAN SQUARE (MSE) } & 4.25460 \\ \text { ADJUSTED R-SQUARED } & 0.4176 & \text { STANDARD DEVIATION } & 2.06267 \end{array}$

$\begin{array}{l|r|c|c|c|c}\text { SOURCE } & \text { DF } & \text { SS } & \text { MS } & \mathrm{F} & \mathrm{P} \\\hline \text { REGRESSION } & 1 & 111.008 & 111.008 & 5.19 & 0.0300 \\\text { RESIDUAL } & 34 & 144.656 & 4.25160 & & \\\text { TOTAL } & 35 & 255.665 & & &\end{array}$

Give a practical interpretation of the coefficient of determination, $\mathrm { R } ^ { 2 }$ .

• A) About \(43 \%\) of the sample variation in number of man-hours can be explained by the simple linear model.
• B) \(\mathrm { y } = 1.88 + 0.00321 \mathrm { x }\) will be correct \(43 \%\) of the time.
• C) Man hours needed to erect drums will be associated with boiler design pressure \(43 \%\) of the time.
• D) About \(2.06 \%\) of the sample variation in number of man-hours can be explained by the simple linear model.

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Definitions:

Reconciling Items

Entries that are made to adjust the books of accounts in order to ensure that two sets of records (usually the bank statement and the company's records) are in agreement.

Adjusting Journal Entry

An entry made in the accounting records at the end of an accounting period to allocate income and expenditure to the appropriate period.

Deferred Revenue Account

An account on the balance sheet that represents payment received by a company for goods and services not yet delivered or rendered, considered a liability.

Liability Account

A liability account is a financial reporting account that is used to record obligations or debts that a company owes to others, such as loans, accounts payable, or mortgages.