TABLE 12-10 One Criterion Used to Evaluate Employees in the Assembly Section

question 119

Multiple Choice

TABLE 12-10
One criterion used to evaluate employees in the assembly section of a large factory is the number of defective pieces per 1,000 parts produced. The quality control department wants to find out whether there is a relationship between years of experience and defect rate. Since the job is repetitious, after the initial training period any improvement due to a learning effect might be offset by a loss of motivation. A defect rate is calculated for each worker in a yearly evaluation. The results for 100 workers are given in the table below.

-Referring to Table 12-10, a test was conducted to determine if a relationship exists between defect rate and years of experience. Which of the following p-values would indicate that defect rate and years of experience are dependent? Assume you are testing at α = 0.05.

• A) 0.045
• B) 0.055
• C) 0.074
• D) 0.080

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Definitions:

Contribution Margin Ratio

The percentage of each sale that remains after variable costs are deducted, indicating how much revenue is contributing to fixed costs and profit.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in sales, reflecting the proportion of fixed costs in the company's cost structure.

Break-even Point

The point where the amount of goods produced or sold matches the total expenses, leading to neither a profit nor a loss.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and to generate profit.