A cost accountant wants to study the cost behavior of financial information and performs a regression analysis on 12 months of data. The dependent variable is overhead costs and the independent variable is machine hours. The co-efficient of determination is 0.83.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
14.
A cost accountant wants to study the cost behavior of financial information and performs a
Which of the following is true?
I. Machine hours and overhead costs are
II. The coefficient of
III. Factors other than machine hours account for about 17% of the variation in overhead costs
IV. Machine hours account for about 63% of the variation in overhead costs.
V. The regression shows a weak correlation between machine hours and overhead costs.
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V only
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III only
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I and II only
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II and III only
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II and IV only
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