The Results of a Least Squares Regression to Separate the Monthly

question 29

Multiple Choice

The results of a least squares regression to separate the monthly utilities cost into its fixed and variable components were as follows: ​
Y = 5,472 + .036 X
X = the number of units produced
R² = .735
​
Which of the following statements is not true of the cost model?

• A)Y represents the total semi-variable cost.
• B)The total monthly fixed utilities costs are $5,472.
• C)Y is referred to as the independent variable.
• D)The equation would be represented as a straight line on a graph.

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Definitions:

Equity Method

An accounting technique used to record investments in associate companies, where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the investee.

Equity Method

An accounting technique used to record investments in associate companies, whereby an investor adjusts the carrying amount of the investment to recognize its share of the earnings or losses of the associate.

Investment Account

An account held at a financial institution that is used to buy, hold, and sell investments such as stocks, bonds, and mutual funds.

Cost Model

An accounting method that values an asset based on the amount spent to acquire it minus any depreciation.