D is corrent. In the regression equation y = a + bx, x is the independent variable, which, in this problem, represents the cost driver. X is independent because it may take on any value, and the value of y depends on the value of x. For example, assume that Box Co. wants to predict setup costs. Plotting past setup data on a scattergram reveals the functional relationship y = 400 + 200x. The cost driver, x, is the number of setups. If two setups are made, set-up costs are $800, or if twenty setups are made, setup costs are $4,400, and so forth.
A is incorrect because a represents the y-intercept (where the regression line intersects the vertical axis), which is not a variable because it takes on only one value.
B is incorrect. Y cannot be the independent variable because the value of y depends on the value of x.
C is incorrect because bx represents the slope of the regression line multiplied by the independent variable.
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