The business of selling insurance is based on probability and the law of large numbers. Consumers buy insurance because we all face risks that are unlikely but carry high cost. Think of a fire destroying your home. So we form a group to share the risk: we all pay a small amount, and the insurance policy pays a large amount to those few of us whose homes burn down. The insurance company sells many policies, so it can rely on the law of large numbers.

In fact, the insurance company sees that in the entire population of homeowners, the mean loss from fire is μ = $300 and the standard deviation of the loss is σ = $400.What are the mean and standard deviation of the average loss for 8 policies? (Losses on separate policies are independent. Round your standard deviation to two decimal places.)

What are the mean and standard deviation of the average loss for 15 policies? (Round your standard deviation to two decimal places.)

The business of selling insurance is based on probability and the law of large numbers. Consumers buy insurance because we all face risks that are unlikely but carry high cost. Think of a fire destroying your home. So we form a group to share the risk: we all pay a small amount, and the insurance policy pays a large amount to those few of us whose homes burn down. The insurance company sells many policies, so it can rely on the law of large numbers.

In fact, the insurance company sees that in the entire population of homeowners, the mean loss from fire is μ = $300 and the standard deviation of the loss is σ = $400.What are the mean and standard deviation of the average loss for 6 policies? (Losses on separate policies are independent. Round your standard deviation to two decimal places.)

What are the mean and standard deviation of the average loss for 13 policies? (Round your standard deviation to two decimal places.)

Review these Skill Builders (and all of the other Course Materials): -Evaluating p-values -Statistical Power Identify the scenario you are evaluating and name the population. Estimate the size of that population. Example: the population of scenario 1 seems to be students at a State University so you could estimate the number of students at a typical State University. The University of South Florida up the road from me has about 40,000 students Identify the independent variable (IV) and the dependent variable (DV). Sometimes this is stated by the researchers and sometimes you have to ferret it out. In scenario 2, the IV and DV are given as Race and Education, respectively. Write a null hypothesis. If the null hypothesis is not provided in the scenario, write a null hypothesis based on the information that is provided in the scenario. Each scenario addresses differences in an interval or ratio DV among a Nominal or Ordinal IV made up of 2 or more groups. So write the null hypothesis this way: There is no difference in Education based on Race among (state/name the population). Critically evaluate the sample size. This is tricky because the scenarios do not provide us with the right information to calculate an appropriate sample size. And you want to avoid stating that a sample size ‘seems’ to be the right size (very amateurish). What to do? Go to this sample size calculator: https://www.surveysystem.com/sscalc.htm. Use the box labeled Calculate Sample Size, Enter .95 for the confidence level, your estimate of the population, 5 for the confidence interval and see what pops up for the ideal sample size. Compare that number to the sample size in the scenario and critically evaluate the sample size in terms of making a Type I or Type II error. For example, if the sample size is smaller than the ideal sample size, does the probability of making a Type I error increase or decrease. Do the same drill with a Type II error. Critically evaluate the scenario for meaningfulness. Follow the guidance I provided in the Announcement Week 5 Discussion: How To Critically Evaluate The Discussion Scenario. Note: we can often relate meaningfulness to social change. That is, if the research is meaningful then it may have implications for social change. Try evaluating meaningfulness and social change in the same paragraph. But first, define meaningfulness and define social change. Cite, cite, cite. Critically evaluate the statements for statistical significance. Compare the researcher reported p-value for the hypothesis test they conducted (either a t-test or an ANOVA) to the confidence level (usually .05). If the reported p-value is greater than .05, then the researcher should fail to reject the null hypothesis and state that there is no statistical significance. If the reported p-value is less than .05, then the researcher should reject the null hypothesis and state that there is statistical significance. I know this is counter-intuitive. Just do it. Add this for grins, “There is no such decision as ‘rapidly approaching significance.’ This is statistics, not a hurricane watch.” Select 1 response to the following multiple choice question: What scenario would you find to be the least fun?Having a root canal performed by an experienced dentist. Having 4 root canals performed by an unsupervised novice dentist. Having 21 root canals performed by a trained Capuchin monkey. Trying to statistically determine differences in patient post-root canal pain levels based on the dentist’s training.

Data:

Selling price $275
Manufacturing Cost:
Variable per unit produced:
Direct materials $104
Direct labor 63
Variable manufacturing overhead 33
Fixed manufacturing overhead per year $113,400
Selling and Administrative expenses:
Variable per unit sold $4
Fixed per year 58,000

Year 1 Year 2
Units in beginning inventory 0   
Units produced during the year 2,700 2,100
Units sold during the year 2,300 2,300

Rao Technologies, a California-based high-tech manufacturer, is considering outsourcing some of its electronics production. Four firms have responded to its request for bids, and CEO Mohan Rao has started to perform an analysis on the scores his OM team has entered in the table below. RATINGS OF OUTSOURCE PROVIDERS FACTOR WEIGHT A B C D Labor w 5 4 3 5 Quality procedures 30 2 3 5 1 Logistics system 5 3 4 3 5 Price 25 5 3 4 4 Trustworthiness 5 3 2 3 5 Technology in place 15 2 5 4 4 Management team 15 5 4 2 1 Weights are on a scale from 1 through 30, and the outsourcing provider scores are on a scale of 1 through 5. The weight for the labor factor is shown as a w because Rao’s OM team cannot agree on a value for this weight. For what range of values of w, if any, is company C a recommended outsourcing provider, according to the factor-rating method? Please show work. Thank you

For each of the following scenarios, list the purpose(s) of the visualization and the type(s) of visualization that would best fulfill the purpose(s). Justify your choice.

a. A stock analyst is showing a potential customer how projected returns from various mutual funds will affect the size of retirement savings over time.

b. A tax accountant is showing the CFO how the accumulated effect of asset depreciation differs using Modified Accelerated Cost Recovery System (MACRS)
depreciation, straight-line depreciation, accelerated depreciation, and units of production depreciation.

c. A marketing analyst prepares a viz to show which countries present the best opportunity for expansion to increase profits.

d. A corporate accountant is examining how much variability there is in individual customer spending in response to a social media campaign about company advances
in social responsibility.

e. A large conglomerate corporation operates businesses in several different industries. The CEO wants to see how much each industry contributes to the overall profits of
the corporation.

f. The manager of a movie theater wants to understand how attendance at his movie theater is affected by prices.

For each of the following scenarios, list the purpose(s) of the visualization and the type(s) of visualization that would best fulfill the purpose(s). Justify your choice.

(a) A stock analyst is showing a potential customer how projected returns from various mutual funds will affect the size of retirement savings over time.

b. A tax accountant is showing the CFO how the accumulated effect of asset depreciation differs using Modified Accelerated Cost Recovery System (MACRS)
depreciation, straight-line depreciation, accelerated depreciation, and units of production depreciation.

c. A marketing analyst prepares a viz to show which countries present the best opportunity for expansion to increase profits.

d. A corporate accountant is examining how much variability there is in individual customer spending in response to a social media campaign about company advances
in social responsibility.

e. A large conglomerate corporation operates businesses in several different industries. The CEO wants to see how much each industry contributes to the overall profits of
the corporation.

f. The manager of a movie theater wants to understand how attendance at his movie
theater is affected by prices.

P8-52 Identifying and Analyzing Financial Statement Effects of Stock Transactions

The stockholders’ equity of Verrecchia Company at December 31, 2016, follows.

During 2017, the following transactions occurred.

Jan. 5 Issued 10,000 shares of common stock for $13 cash per share.

Jan. 18 Repurchased 4,000 shares of common at $16 cash per share.

Mar.12 Sold one-fourth of the treasury shares acquired January 18 for $19 cash per share.

July. 17 Sold 500 shares of treasury stock for $14 cash per share

Oct. 1 Issued 5,000 shares of 8%, $25 par value preferred stock for $36 cash per share. This is the first issuance of preferred shares from the 50,000 authorized preferred shares.

Required

1. Use the financial statement effects template to indicate the effects of each transaction.

2. Prepare the December 31, 2017, stockholders’ equity section of the balance sheet assuming that the company reports net income of $76,900 for the year.