A new fuel injection system has been engineered for pickup trucks. The new system and the old system both produce about the same average miles per gallon. However, engineers question which system (old or new) will give better consistency in fuel consumption (miles per gallon) under a variety of driving conditions. A random sample of 41 trucks were fitted with the new fuel injection system and driven under different conditions. For these trucks, the sample variance of gasoline consumption was 53.6. Another random sample of 24trucks were fitted with the old fuel injection system and driven under a variety of different conditions. For these trucks, the sample variance of gasoline consumption was 39.7. Test the claim that there is a difference in population variance of gasoline consumption for the two injection systems. Use a 5% level of significance. How could your test conclusion relate to the question regarding the consistency of fuel consumption for the two fuel injection systems?

(a) What is the level of significance?
  

State the null and alternate hypotheses.

H_o: σ₁² = σ₂²; H₁: σ₁² > σ₂²H_o: σ₁² > σ₂²; H₁: σ₁² = σ₂²    H_o: σ₂² = σ₁²; H₁: σ₂² > σ₁²H_o: σ₁² = σ₂²; H₁: σ₁² ≠ σ₂²

(b) Find the value of the sample F statistic. (Round your answer to two decimal places.)
  

What are the degrees of freedom?

What assumptions are you making about the original distribution?

The populations follow independent normal distributions.The populations follow independent normal distributions. We have random samples from each population.    The populations follow dependent normal distributions. We have random samples from each population.The populations follow independent chi-square distributions. We have random samples from each population.

(c) Find or estimate the P-value of the sample test statistic.

P-value > 0.2000.100 < P-value < 0.200    0.050 < P-value < 0.1000.020 < P-value < 0.0500.002 < P-value < 0.020P-value < 0.002

(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis?

At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.    At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.\

(e) Interpret your conclusion in the context of the application.

Fail to reject the null hypothesis, there is sufficient evidence that the variance in consumption of gasoline is greater in the new fuel injection systems.

Reject the null hypothesis, there is insufficient evidence that the variance in consumption of gasoline is greater in the new fuel injection systems.   

Reject the null hypothesis, there is sufficient evidence that the variance in consumption of gasoline is different in both fuel injection systems.

Fail to reject the null hypothesis, there is insufficient evidence that the variance in consumption of gasoline is different in both fuel injection systems.

Linton Company purchased a delivery truck for $29,000 on January 1, 2017. The truck has an expected salvage value of $2,100, and is expected to be driven 106,000 miles over its estimated useful life of 10 years. Actual miles driven were 15,300 in 2017 and 13,400 in 2018. Correct answer. Your answer is correct. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.52.) Depreciation expense $Entry field with correct answer .25 per mile SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT Correct answer. Your answer is correct. Compute depreciation expense for 2017 and 2018 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method. (Round depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answers to 0 decimal places, e.g. 2,125.) Depreciation Expense 2017 2018 (1) Straight-line method $Entry field with correct answer 2690 $Entry field with correct answer 2690 (2) Units-of-activity method $Entry field with correct answer 3825 $Entry field with correct answer 3350 (3) Double-declining-balance method $Entry field with correct answer 5800 $Entry field with correct answer 4640 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT Partially correct answer. Your answer is partially correct. Try again. Assume that Linton uses the straight-line method. Prepare the journal entry to record 2017 depreciation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 2,125.) Account Titles and Explanation Debit Credit Entry field with correct answer Depreciation Expense Entry field with correct answer 2690 Entry field with correct answer Entry field with incorrect answer now contains modified data Accumulated Depreciation-Equipment Entry field with correct answer Entry field with correct answer 2690 SHOW LIST OF ACCOUNTS LINK TO TEXT Partially correct answer. Your answer is partially correct. Try again. Assume that Linton uses the straight-line method. Show how the truck would be reported in the December 31, 2017, balance sheet. (Round answers to 0 decimal places, e.g. 2,125.) LINTON COMPANY Partial Balance Sheet Entry field with correct answer Entry field with incorrect answer now contains modified data $Entry field with incorrect answer now contains modified data 29000 Entry field with correct answer: Entry field with incorrect answer now contains modified data Accumulated Depreciation-Equipment Entry field with incorrect answer now contains modified data 2690 $Entry field with incorrect answer now contains modified data 26310

A new fuel injection system has been engineered for pickup trucks. The new system and the old system both produce about the same average miles per gallon. However, engineers question which system (old or new) will give better consistency in fuel consumption (miles per gallon) under a variety of driving conditions. A random sample of 31 trucks were fitted with the new fuel injection system and driven under different conditions. For these trucks, the sample variance of gasoline consumption was 52.7. Another random sample of 24 trucks were fitted with the old fuel injection system and driven under a variety of different conditions. For these trucks, the sample variance of gasoline consumption was 38.5. Test the claim that there is a difference in population variance of gasoline consumption for the two injection systems. Use a 5% level of significance. How could your test conclusion relate to the question regarding the consistency of fuel consumption for the two fuel injection systems?

(a) What is the level of significance?


State the null and alternate hypotheses.

H_o: σ₁² = σ₂²; H₁: σ₁² > σ₂²H_o: σ₁² > σ₂²; H₁: σ₁² = σ₂²    H_o: σ₂² = σ₁²; H₁: σ₂² > σ₁²H_o: σ₁² = σ₂²; H₁: σ₁² ≠ σ₂²

(b) Find the value of the sample F statistic. (Round your answer to two decimal places.)


What are the degrees of freedom?

What assumptions are you making about the original distribution?

The populations follow dependent normal distributions. We have random samples from each population.The populations follow independent chi-square distributions. We have random samples from each population.    The populations follow independent normal distributions. We have random samples from each population.The populations follow independent normal distributions.

(c) Find or estimate the P-value of the sample test statistic.

P-value > 0.2000.100 < P-value < 0.200    0.050 < P-value < 0.1000.020 < P-value < 0.0500.002 < P-value < 0.020P-value < 0.002

(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis?

At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.    At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.

(e) Interpret your conclusion in the context of the application.

Fail to reject the null hypothesis, there is sufficient evidence that the variance in consumption of gasoline is greater in the new fuel injection systems.Reject the null hypothesis, there is insufficient evidence that the variance in consumption of gasoline is greater in the new fuel injection systems.    Reject the null hypothesis, there is sufficient evidence that the variance in consumption of gasoline is different in both fuel injection systems.Fail to reject the null hypothesis, there is insufficient evidence that the variance in consumption of gasoline is different in both fuel injection systems.

A new fuel injection system has been engineered for pickup trucks. The new system and the old system both produce about the same average miles per gallon. However, engineers question which system (old or new) will give better consistency in fuel consumption (miles per gallon) under a variety of driving conditions. A random sample of 41 trucks were fitted with the new fuel injection system and driven under different conditions. For these trucks, the sample variance of gasoline consumption was 53. Another random sample of 21 trucks were fitted with the old fuel injection system and driven under a variety of different conditions. For these trucks, the sample variance of gasoline consumption was 33.1. Test the claim that there is a difference in population variance of gasoline consumption for the two injection systems. Use a 5% level of significance. How could your test conclusion relate to the question regarding the consistency of fuel consumption for the two fuel injection systems?

(a) What is the level of significance?


State the null and alternate hypotheses.

H_o: σ₁² = σ₂²; H₁: σ₁² > σ₂²H_o: σ₁² > σ₂²; H₁: σ₁² = σ₂²    H_o: σ₂² = σ₁²; H₁: σ₂² > σ₁²H_o: σ₁² = σ₂²; H₁: σ₁² ≠ σ₂²

(b) Find the value of the sample F statistic. (Round your answer to two decimal places.)


What are the degrees of freedom?

What assumptions are you making about the original distribution?

The populations follow independent normal distributions. We have random samples from each population.The populations follow dependent normal distributions. We have random samples from each population.    The populations follow independent normal distributions.The populations follow independent chi-square distributions. We have random samples from each population.

(c) Find or estimate the P-value of the sample test statistic.

P-value > 0.2000.100 < P-value < 0.200    0.050 < P-value < 0.1000.020 < P-value < 0.0500.002 < P-value < 0.020P-value < 0.002

(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis?

At the α = 0.05 level, we reject the null hypothesis and conclude the data are not statistically significant.At the α = 0.05 level, we reject the null hypothesis and conclude the data are statistically significant.    At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are not statistically significant.At the α = 0.05 level, we fail to reject the null hypothesis and conclude the data are statistically significant.

(e) Interpret your conclusion in the context of the application.

Fail to reject the null hypothesis, there is sufficient evidence that the variance in consumption of gasoline is greater in the new fuel injection systems.Reject the null hypothesis, there is insufficient evidence that the variance in consumption of gasoline is greater in the new fuel injection systems.    Reject the null hypothesis, there is sufficient evidence that the variance in consumption of gasoline is different in both fuel injection systems.Fail to reject the null hypothesis, there is insufficient evidence that the variance in consumption of gasoline is different in both fuel injection systems.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.10 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $352,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)

3. The company recently completed a 400 square foot carpet-cleaning job at the Flying N Ranch—a 50-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate calculations and final answer to 2 decimal places.)

4. The revenue from the Flying N Ranch was $88.40 (4 hundred square feet @ $22.10 per hundred square feet). Calculate the customer margin earned on this job. (Round your intermediate calculations and final answers to 2 decimal places.)

IRAC Torts

Bauer Insulation Co (BIC) was a subcontractor on an expansion project at the Dixon-Goetz manufacturing plant in Lowville, New York which is a remote part of upstate New York approximately 40 miles from the nearest population centers.  Given the remoteness of the work site, BIC provided $30 per day in subsistence pay to each of its employees to defer part of the cost of a motel room or apartment in the nearest towns.  BIC did not require its employees to spend the money on lodging.  The employees were free to spend it or not spend it as they saw fit.  In fact the President of BIC, Zachary Bauer, would tell his employees, “if I were you, I’d pocket the money and commute!  It isn’t taxable income, its like free money!”

James LePage, a BIC employee was assigned to work on the expansion project in Lowville and he received the $30 per day subsistence pay from BIC but he elected to make the commute to the plant from his home in Rochester, NY which was 120 miles from the work site.  james, a resourceful young man, convinced a few other co-workers along the route to carpool to save additional money.  The parties would share the driving responsibilities.  The work schedule was Monday through Friday 7am to 5:30pm with a half hour for lunch and few if any breaks.  In addition to his employment with BIC, James also worked at the local Dick’s sporting goods store a second job at night as a stock clerk.

James completed his regular shift at the plant on a Tuesday and returned to Rochester at 8:30pm.  He then worked his second job before going to bed around midnight.  James then rose at 4:00am on Wednesday to get his vehicle and collect his co-workers for the daily commute to the plant, where he worked his normal shift.  The car pool with James driving left the plant around 6:00pm.  Shortly thereafter, James fell asleep at the wheel.  His vehicle crossed the centerline of the highway and collided head-on with a vehicle in which Matt Krengel was the passenger.  Matt expired in the accident and his widow, Claire McMahon, acting in her own right and as a personal representative of her late husband’s estate, filed a negligence-based wrongful death action against BIC in a New York State Court.

The lawsuit filed by McMahon claimed that BIC owed a duty of care to the other travelers on the highway to prevent injury caused by employees who had become exhausted after being required to commute long distances and work long hours and were even encouraged to do so with the $30 per day stipend.  She contended in her complaint that BIC breached its duty by “failing to take precautionary measures to prevent employees from becoming so exhausted that they pose a threat of harm to the traveling public and failing to provide alternative transportation to its exhausted employees or in the alternative, failing to provide living quarters to its employees within a reasonable from the plant site.

Discuss the legal theory put forth by Mrs. McMahon based on the various theories of negligence discussed in class.  Using the IRAC format conclude on the likelihood of success of this lawsuit.

Required information

Problem 9-31 Production and Direct-Labor Budgets; Activity-Based Overhead Budget (LO 9-3, 9-4, 9-5, 9-6)

[The following information applies to the questions displayed below.]

Spiffy Shades Corporation manufactures artistic frames for sunglasses. Talia Demarest, controller, is responsible for preparing the company’s master budget. In compiling the budget data for 20x1, Demarest has learned that new automated production equipment will be installed on March 1. This will reduce the direct labor per frame from 1.0 hour to 0.75 hour.

Labor-related costs include pension contributions of $1.30 per hour, workers’ compensation insurance of $1.00 per hour, employee medical insurance of $4 per hour, and employer contributions to Social Security equal to 7.00 percent of direct-labor wages. The cost of employee benefits paid by the company on its employees is treated as a direct-labor cost. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $15.00 per hour on April 1, 20x1. Management expects to have 16,200 frames on hand at December 31, 20x0, and has a policy of carrying an end-of-month inventory of 100 percent of the following month’s sales plus 40 percent of the second following month’s sales.

These and other data compiled by Demarest are summarized in the following table.

1. Prepare a production budget and a direct-labor budget for Spiffy Shades Corporation by month and for the first quarter of 20x1. (Round "Direct-labor hours per unit" to 2 decimal places.)

2. For each item used in the firm’s production budget and direct-labor budget, select the other components of the master budget (except for financial statement budgets) that also, directly or indirectly, would use these data. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

1. Sales data:

• Selling and administrative expense budgetunanswered
• Production-overhead budgetunanswered
• Direct-material budgetunanswered
• Cash budgetunanswered
• Cost-of-goods-sold budgetunanswered
• Sales budgetunanswered
• Cash disbursements budgetunanswered

2. Production data:

• Selling and administrative expense budgetunanswered
• Direct-material budgetunanswered
• Cost-of-goods-sold budgetunanswered
• Production-overhead budgetunanswered
• Cash budgetunanswered
• Cash disbursements budgetunanswered
• Sales budgetunanswered

3. Direct-labor-hour data:

• Selling and administrative expense budgetunanswered
• Production-overhead budgetunanswered
• Direct-material budgetunanswered
• Cash budgetunanswered
• Cost-of-goods-sold budgetunanswered
• Sales budgetunanswered
• Cash disbursements budgetunanswered

4. Direct-labor cost data:

• Selling and administrative expense budgetunanswered
• Production-overhead budgetunanswered
• Direct-material budgetunanswered
• Cash budgetunanswered
• Sales budgetunanswered
• Cost-of-goods-sold budgetunanswered
• Cash disbursements budget

3. Prepare a production overhead budget for each month and for the first quarter.

PLEASE READ AND ANSWER

CASE #3 TATA'S TIME(STRATEGIC MANAGEMENT IN ACTION SIXTH EDITION)

It holds the number 6 spot on the list of the world's most admired companies in the steel industry. The Tata Group, based in Mumbai, India, is the largest conglomerate in that country. Its lat­est revenues are estimated at $67.4 billion, of which 61 percent is from business outside India. Tata has more than 100 operating companies in seven main business groups doing business in 80 countries: chemicals, information systems and communications, consumer products, energy, engineering, materials, and services. Its two largest businesses are Tata Steel and Tata Motors. Its Tata Tea, which owns the valued Tetley brand, also is one of the larg­est tea producers in the world. Ratan Tata, Tata Group's chairper­ son, has forged a strategy that encompasses the globe. In 1999, he issued a "clarion call to push outside India with acquisitions and exports." One of the company's executive directors recalled, "We didn't know what to expect, to be honest."

Today, Tata controls many businesses ranging from Eight O'clock Coffee Co. in the United Sates to the Taj Group of hotels, which took over management of the landmark Pierre Hotel on Central Park in New York City. Tata made its boldest global strategic push, however, in October 2006 when Tata Steel formally proposed buying British steelmaker Corus Group PLC for about $8 billion USD. Corus, which was formed by a merger of British Steel and Hoogovens, was three times the size of Tata Steel. The buyout offer soon turned into a bidding war when Tata Group discovered another company, Companhia Siderùrgica, Nacional of Brazil (CSN), was also preparing a bid and therefore upped its opening offer to $9.2 billion; CSN then raised the stakes by offering to pay $9.6 billion. A Tata Group spokesman said that the company's attempt to acquire Corus was "based on a compelling strategic rationale." Ratan Tata explained further by saying, "The revised terms deliver substantial additional value to Corus shareholders." The increased takeover bid did not impress investors as the company's share price fell 6 percent after the news was announced. Analysts and investors both "expressed concern that Tata is overpricing Corus, whose operating costs are among the highest of any steel maker—something that would affect its profitability and its plans to expand in India." However, Ratan Tata knew that the acquisition could catapult Tata Steel from its mid-50s ranking in the global steel list to the sixth-largest industry competitor. He said, "Analysts were taking a short-term, harsh view of the deal. Hopefully, the market will look back and say it was the right move." By the end of JanuaQi 2007, the U.K. Takeover Panel called an auction in order to end the bidding war and "presided over the contest that started on Tuesday, January 30." The "contest" continued for several hours until CSN pulled out. Tata Steel won its coveted prize for $12.2 billion—a 22 percent premium over what it had originally offered. That acquisition represented the latest consolidation in the global steel industry. The combined Tata-Corus can produce 25 million tons of steel a year. The deal also represented the largest foreign acquisition by an Indian company and made the diversified Tata Group the largest company in India.

In 2008, Tata made an even bigger global splash, at least in terms of recognized consumer brand names. It acquired the Land Rover and Jaguar brands from Ford for an estimated $2.3 billion.

Tata's leaders believe the group "can survive on the world stage only by being both too big to beat and too good to fail." In December 2012, when Chairman Ratan Tata steps down, Cyrus Mistry will take over as chairman of Tata Group and he "faces the daunting challenge of steering a giant, increasingly multinational conglomerate of more than 100 companies through economic headwinds at home and abroad."

DISCUSSION QUESTIONS

1. Discuss the advantages and drawbacks of going international using Tata Group's experiences.

2. What strategic challenges do you think Cyrus Mistry might face as he guides his company? Using what you know about managing strategically, how might he respond to these challenges?

3. Do some research on India's economic and political-legal environments. What opportunities and threats do you see?​​​​​​​ In light of these, do you think Ratan Tata's strategy of push­ing outside India makes sense? Explain.

​​​​​​​THANK YOU!

Using the Motor Trend Cars Data Set, you would like to determine if there is a relationship between MPG (miles per gallon) and specific variables included in the data set.

1. Develop a correlation matrix using MPG (miles per gallon), HP (horsepower), WT (weight). Is the correlation between the variables MPG v HP significant? Perform the appropriate test and use a level of significance of 0.05
2. Fit a multiple regression model using MPG (miles per gallon) as the dependent variable and HP (horsepower), and WT (weight) as the independent variables. State your regression model.
3. Is the overall regression model significant? Conduct the appropriate hypothesis test for the significance of the overall regression model. Use a 0.05 level of significance.
4. Are the individual independent variables significant? Conduct the hypothesis tests for the significance of each independent variable at the= 0.05 level of significance.
5. What proportion of the variation in MPG is explained by the independent variables HP and WT?
6. Graph the residuals from the regression you developed in part (a). Do the regression assumptions appear to be appropriate given the residual plots? Explain your answer.