Asked by Jesse Gonzalez on Jul 15, 2024
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The R2 (i.e., R-squared)tells us the percentage of the variation in the dependent variable (cost)that is explained by variation in the independent variable (activity).
R-squared
A statistical measure that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.
Dependent Variable
A variable that responds to some causal factor; total cost is the dependent variable, as represented by the letter Y, in the equation Y = a + bX.
Independent Variable
A variable in an experiment that is manipulated to observe its effect on the dependent variable.
- Interpret R-squared in the context of cost variation and its explanatory power regarding the independent variable.
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Learning Objectives
- Interpret R-squared in the context of cost variation and its explanatory power regarding the independent variable.
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