In: Statistics and Probability
Budget lapsing occurs when unspent funds do not carry over from one budgeting period to the next. The information in this question is based on the Journal of Management Accounting Research (Vol. 19, 2007) study of budget lapsing in U.S. army hospitals. Because budget lapsing often leads to a spike in expenditures at the end of the fiscal year, the researches recorded expenses per full-time equivalent employee for each in a sample of 1,751 army hospitals. The sample yielded the following statistics:
x = $6,563
s = $2,484
a.
M = 6563
Z = 1.64
sM = √(24842/1751) =
59.36
μ = M ± Z(sM)
μ = 6563 ± 1.64*59.36
μ = 6563 ± 97.64
90% CI [6465.36, 6660.64]