Assuming That a Regression Has Been Conducted for a Group

question 119

Multiple Choice

Assuming that a regression has been conducted for a group of small companies where x = the number of employees at the company,y = annual revenue of the company (recorded in thousands of dollars) ,and the largest company included in the study had 82 employees.The resulting regression equation is = 59.2 + 83.4x.Which of the following is true?

• A)For each additional employee,revenue on average will increase by $83.4
• B)A company with 2100 employees could be predicted to have average revenue of about $175 million.
• C)For each additional employee,revenue on average will increase by $59.2 thousand.
• D)This model should not be used to make predictions for companies with more than 82 employees.

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Definitions:

Activity Level

Activity level refers to the volume of production or operations in a business. It is a determinant in both variable costing and activity-based costing, impacting how costs are allocated and managed.

Spending Variance

The difference between the budgeted amount of expenses and the actual amount spent.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services and are a part of the finished product.

Spending Variance

The difference between the actual spending and budgeted or expected spending, used to assess financial management and cost control.