Zoom-IT Is a High-Technology Firm Specializing in Electronic Consumer Products

question 65

Multiple Choice

Zoom-IT is a high-technology firm specializing in electronic consumer products.In particular,the company has worked on expansion systems for LCD and plasma screens.The company has developed a method for expanding the 2-inch screen on Apple iPod video display units to 8 inches by increasing the weight of the iPod by only 3 ounces.The "pop out" screen relies on Space Age plastics and an electronic expansion system that works similar to camera shutters.The only drawback is that the add-on device costs an additional $350,more than the cost of the iPod.Before going into production and marketing,Zoom-IT CEO Jane Ellen Roberts,decides she wants some evidence that the device will sell.She commissions the marketing research department to conduct a survey and the critical question asks for likelihood to purchase the product on a 10-point scale.The researchers,attempting to determine the ideal sample size,realize there is no former study on this issue on which they could estimate the standard deviation in the population.They are considering the expense of a small pilot test,but researchers James Hughes and Bennet Alford make a reasonable recommendation to:

• A)use 50/50.
• B)use the standard deviation from a study they conducted on expanding plasma screens from 40 inches to 90 inches.
• C)use a table of random numbers to generate a random standard deviation.
• D)divide the 10 scale points by 6 because ±3 (or 6)standard deviations covers the range of observations (10)and by dividing by 6 will yield a reasonable estimate of 1 standard deviation which they may use for s.
• E)None of the above;you do not need to estimate standard deviation in the sample size formula for the mean.

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Definitions:

Perpetual Inventory System

An accounting method that records inventory transactions in real-time, thus providing a continual account of inventory balances.

Net Price Method

The net price method calculates the final price after all discounts, rebates, and allowances have been subtracted from the list price.

Catalog Price

The price listed in a catalog, not accounting for any discounts or promotions.