Victoria Is a Budget Analyst at Young Industries

question 37

Multiple Choice

Victoria is a budget analyst at Young Industries.She used the least squares regression method to separate the plant's monthly utilities cost into its fixed and variable components.The results were as follows: Y = 3,250 + .054 X
X = the number of units produced
R² = .892
How should Victoria interpret the R² of .892?

• A)The equation is a better predictor of fixed costs than of variable costs 89.2% of the time.
• B)The equation will accurately predict utility costs 89.2% of the time.
• C)Fixed costs make up 89.2% of the total semi-variable cost in any given month.
• D)The number of units produced explains 89.2% of the variation in the plant utilities cost.

Apply the concepts of compounding interest semiannually and annually in financial calculations.

Assess investment or loan scenarios to make informed financial decisions.

Understand the structure and calculation of annuities, including future and present values.

Calculate the interest rate necessary to achieve a future financial goal with given present values.

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Definitions:

Industry Supply

The total quantity of a particular good or service that is available for purchase in a market by all producers.

Market Price

The current price at which an asset or service can be bought or sold, determined by the supply and demand forces in the market.

Perfect Competition

A market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, leading to optimal prices.

Identical Product

Goods that are exactly the same in terms of quality, size, and features, making them perfect substitutes for each other.