fl97ex1

# fl97ex1 - Use the following information to answer the next...

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Use the following information to answer the next five questions. An auditing firm was hired to determine if a particular defense plant was overstating the value of their inventory items. It was decided that 16 items would be randomly selected. For each item, the recorded amount, the audited (exact) amount, and the difference between these two amounts (recorded - audited) were determined. Of particular interest was whether it could be demonstrated that the average difference exceeds \$30, in which case the defense plant would be subject to a loss of contract and financial penalties. The sample of 16 differences yielded a mean of \$36 and a standard deviation of \$11.50. Conduct a hypothesis test at the .05 significance level. 1. The significance level of the hypothesis test refers to the probability of A. being unable to come to a conclusion due to insufficient information. B. being able to come to any conclusion based on “gut” feelings. C. concluding the defense plant is overstating the value of their inventory by more than \$30 on average, when in fact they are not. D. concluding the defense plant is not overstating the value of their inventory by more than \$30 on average, when in fact they are. E. either concluding the defense plant is overstating the value of their inventory by more than \$30 on average, when in fact they are not, or concluding the defense plant is not overstating the value of their inventory by more than \$30 on average, when in fact they are. 2. To test the claim that the defense plant is overstating the value of their inventory by more than \$30 on average, which of the following would be appropriate for the null hypothesis? A. μ < 30 B. μ > 30 C. μ ≠ 30 D. μ < 30 E. μ > 30

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3. What is the value of the appropriate test statistic? A. t* = 2.087 B. p* = .0183 C. p = . 0366 D. t* = .5217 E. .025 < Z*< .05 4. Based on the value of the test statistic the correct conclusion is to say A. There is evidence the defense plant is overstating the value of their inventory items by more than \$30 because the test statistic is larger than the critical (table) value. B. There is evidence the defense plant is overstating the value of their inventory items by \$30 or less because the test statistic is larger than the critical (table) value. C. There is evidence the defense plant is overstating the value of their inventory items by more than \$30 because the test statistic is smaller than the critical (table) value. D. There is insufficient evidence the defense plant is overstating the value of their inventory items by more than \$30 because the test statistic is smaller than the critical (table) value. E. There is insufficient evidence the defense plant is overstating the value of their inventory items by \$30 or less because the test statistic is smaller than the critical (table) value. 5.
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## This note was uploaded on 03/09/2011 for the course DSCI 3710 taught by Professor Dr.jay during the Spring '08 term at North Texas.

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fl97ex1 - Use the following information to answer the next...

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