The Managerial Accountant at Organic Beverage Factory Used Spreadsheet Software

Multiple Choice

The managerial accountant at Organic Beverage Factory used spreadsheet software to run a regression analysis scenario and compile the following monthly cost data: Based on the results of the regression analysis compiled by the managerial accountant, what does the R-square indicate?

A) Management should use the cost equation with caution.
B) Management can always rely upon cost equations prepared using linear regression analysis.
C) Management can rely on the cost equation because the R-square is above 50%
D) Management ignores the R-square in regression analysis.