Coefficient of determination, Managerial Accounting

Coefficient of Determination (r2)

If the regression line calculated by the least square method were to fit the actual observations perfectly, then all observed points would lie on the regression line. The coefficient of determination, r2, explains the amount of variation in Y which is explained by the introduction of X in the model. A perfect linear relationship between X and Y would result in r2 being equal to 1.

r2 =  (explained variation)/(Total variation) 
       
 
  = [∑(Y  - ý)2] / [∑ (Y- ý)2]

Where:

ý is the mean value of Y

For computation purposes r2 can be given by

r2 =   (n ∑ xy  - ∑ x ∑x)2
       [n ∑x -( ∑x)2]  [n ∑y2 – (∑y)2]

Posted Date: 12/5/2012 5:11:44 AM | Location : United States







Related Discussions:- Coefficient of determination, Assignment Help, Ask Question on Coefficient of determination, Get Answer, Expert's Help, Coefficient of determination Discussions

Write discussion on Coefficient of determination
Your posts are moderated
Related Questions
EVALUATION OF THE REGRESSION MODEL The regression equation calculated above was based on the assumption that cost varied with the units produced. However, a number of different

Define Zero bases budgeting According to CIMA According to CIMA, ZBB is a method of budgeting whereby all activities are re evaluated each time a budget is set. Discrete l

Cause Company is planning to invest in a machine with a useful life of five years and no salvage value. The machine is expected to produce cash flow from operations of $20,000 in e

Monitor Let's start by having you think about the controlling your car (aka "driving")! Your steering, acceleration, and braking are not the random things to be done; they are

What are the limation of semi variable cost and how to overcome it?

Excess machine hours 20,000. Received offers from two companies to buy 210,000 units of F at 0.60 and 300,000 units of D at 0.70. Estimated costs for the two products are;


SK 2 Chapter 10: Master budgeting Objective How organisations strive to achieve their financial goals by preparing a number of budgets that together form an integrated business pla

How much to order Supposing the estimated annual usage of a component by Machinery Ltd is 20,000 units.  Usage is even throughout the year and only one order per annum is place

Prepare a multiple step income statement, and classified balance sheet for XYZ Corporation for 2013 in good form. The income statement should include the proper earnings per share