Question

20.

Accounting procedures allow a business to evaluate its inventory costs based on two methods: LIFO (Last In First Out) or FIFO (First In First Out). A manufacturer evaluated its finished goods inventory (in $000s) for five products with the LIFO and FIFO methods. To analyze the difference, they computed (FIFO − LIFO) for each product. Based on the following results, does the LIFO method result in a lower cost of inventory than the FIFO method?

Product	FIFO (F)	LIFO (L)
1	225	221
2	119	100
3	100	113
4	212	200
5	248	245

What is the decision at the 5% level of significance?

Multiple Choice

• Fail to reject the null hypothesis and conclude LIFO is more effective.

• Reject the null hypothesis and conclude LIFO is more effective.

• Reject the alternate hypothesis and conclude LIFO is more effective.

• Fail to reject the null hypothesis.

21.

When testing the hypothesized equality of two population means, the implied null hypothesis is defined as ______.

Multiple Choice

• H₀: µ₁ = 0

• H₀: µ₁ − µ₂ = 0

• H₀: µ₂ = 0

• H₀: µ₁ − µ₂ ≠ 0

22. The alternative hypothesis used in ANOVA is H₁: All population means are equal.

True or False

23.

A large department store examined a sample of the 18 credit card sales and recorded the amounts charged for each of three types of credit cards: MasterCard, Visa, and Discover. Six MasterCard sales, seven Visa, and five Discover sales were recorded. The store used an ANOVA to test if the mean sales for each credit card were equal. What are the degrees of freedom for the F statistic?

Multiple Choice

• 18 in the numerator, 3 in the denominator

• 3 in the numerator, 18 in the denominator

• 2 in the numerator, 15 in the denominator

• 6 in the numerator, 15 in the denominator

Answer 1