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In: Statistics and Probability

Budget lapsing occurs when unspent funds do not carry over from one budgeting period to the...

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

  1. Estimate the mean expenses for full-time equivalent employee for all U.S. army hospitals using a 90% confidence interval.
  2. In 2007 the mean expenses for the entire public was believed to be $7000. Conduct a test at α =.10 to determine if the mean expenses for an army hospital employee are equal to that of the public. Show all 7 steps.

Solutions

Expert Solution

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]

orchestra answered 2 years ago
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