Hill Top Products Has Run a Regression Analysis for Utilities

Multiple Choice

Hill Top Products has run a regression analysis for utilities costs and the total production for the past six months. The regression analysis shows an R square (R²) of .86. Which of the following statements best describes the meaning of R²?

A) 86 percent of the company's total costs are utilities costs.
B) 14 percent of the variation in utilities costs is explained by the increase or decrease in production.
C) 86 percent of the variation in utilities costs is explained by the increase or decrease in production.
D) 86 percent of the company's total costs are fixed costs and the remaining 14 percent are variable costs.