Cindy Ho, VP of Finance at Discrete Components, Inc Using $\alpha$

question 18

Multiple Choice

Cindy Ho, VP of Finance at Discrete Components, Inc.(DCI) , theorizes that the discount rate offered to credit customers affects the average collection period on credit sales.Accordingly, she has designed an experiment to test her theory using four sales discount rates (0%, 2%, 4%, and 6%) by randomly assigning five customers to each sales discount rate.An analysis of Cindy's data produced the following ANOVA table. $$\begin{array} { | r | r | r | r | r | } \hline \text { Source of Variation } & \mathbf { S S } & \mathrm { df } & \mathrm { MS } & \text { F } \\\hline \text { Treatrnent } & 5.35 & \mathbf { 3 } & 1.783333 & \\\hline \text { Error } & 177.2 & 16 & 11.075 & \\\hline \text { Total } & 182.55 & 19 & & \\\hline\end{array}$$ Using $\alpha$ = 0.01, the appropriate decision is _________.

• A)reject the null hypothesis \(\mu\)₁=\(\mu\)₂=\(\mu\)₃=\(\mu\)₄
• B)reject the null hypothesis \(\mu\)₁ \(\neq\) \(\mu\)₂ \(\neq\)\(\mu\)₃\(\neq\)\(\mu\)₄
• C)do not reject the null hypothesis \(\mu\)₁=\(\mu\)₂=\(\mu\)₃=\(\mu\)₄
• D)do not reject the null hypothesis \(\mu\)₁ \(\neq\)\(\mu\)₂ \(\neq\)\(\mu\)₃ \(\neq\)\(\mu\)₄
• E)do nothing

---

Definitions:

Distribution Costs

Expenses associated with delivering goods from production sites to points of sale and ultimately to customers.

Inventory Destroyed

Goods that have been damaged or ruined to such an extent that they cannot be sold or used.

Gross Profit Ratio

A profitability ratio calculated as gross profit divided by net sales, indicating the percentage of sales revenue that exceeds the cost of goods sold.

Average Cost

A method for inventory valuation that calculates the cost of goods sold and ending inventory based on the average cost of all items purchased.