A risk manager is testing a portfolio for heteroskedasticity using the White test. The portfolio is modeled as follows:

$Y_i = \alpha + \beta X_{1i} + \epsilon_i$

The residuals are computed as follows:

$\hat{\epsilon}_i = Y_i - \hat{\alpha} - \hat{\beta}X_{1i}$

Which of the following correctly depicts the second step in the White test for the portfolio?