Defects in the Finish of New, Custom, Automobiles Usually Require

question 39

Multiple Choice

Defects in the finish of new, custom, automobiles usually require the whole body to be repainted. In one "custom" shop, the percentage of defective finishes has been 2 percent. If a sample size of 10 is taken, what should be the 99.7 percent upper control limit be?

• A) 0.1328
• B) 0.1085
• C) 0.0443
• D) 0.1528
• E) None of the above

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Definitions:

Days Sales Outstanding

A measure that calculates the average time it takes for a company to collect payments after a sale has been made.

Accounts Receivable

Funds that customers owe to a business for products or services rendered but for which payment has not yet been received.

Net Sales

Revenue generated from the sale of goods or services, minus returns, allowances, and discounts.

Debt Ratio

A financial ratio that measures the extent of a company's leverage by comparing total liabilities to total assets.