Balcom Enterprises is planning to introduce a new product that will sell for $140 per unit. Manufacturing cost estimates for 30,000 units for the first year of production are:

• Direct materials $1,590,000.
• Direct labor $624,000 (based on $16 per hour 39,000 hours).

Although overhead has not be estimated for the new product, monthly data for Balcom's total production for the last two years has been analyzed using simple linear regression. The analysis results are as follows:

Dependent variable	Factory overhead costs
Independent variable	Direct labor hours
Intercept	$	140,000
Coefficient on independent variable	$	6.00
Coefficient of correlation		0.971
R2		0.854

Based on this information, what percentage of the variation in overhead costs is explained by the independent variable?