Question

The independent variable in regression analysis is:

a) the cost to be estimated.

b) the cost driver used to estimate the value of the dependent variable.

c) hard to define because of its independence.

d) usually expressed as a range of values.

e) always a volume-based cost driver.

Answer 1

In regression analysis, the independent variable is the factor manipulated to observe its effects on the dependent variable, often seen as the cause in a cause-effect relationship.

Step-by-step explanation:

The independent variable in regression analysis is: b) the cost driver used to estimate the value of the dependent variable.

In regression analysis, the independent variable is the factor you manipulate or change to see its effects on another variable. This manipulated variable is known as the independent variable (IV), while the variable that is expected to change or respond as a result is called the dependent variable (DV).

For instance, in the context of cost estimations, the size of a manufacturing run might be the independent variable that influences the total cost, making the cost the dependent variable. Hence, independent variables are the cause while dependent variables are the effect.