TABLE 10-8
a Buyer for a Manufacturing Plant Suspects That

question 142

Essay

TABLE 10-8
A buyer for a manufacturing plant suspects that his primary supplier of raw materials is overcharging. In order to determine if his suspicion is correct, he contacts a second supplier and asks for the prices on various identical materials. He wants to compare these prices with those of his primary supplier. The data collected is presented in the table below, with some summary statistics presented (all of these might not be necessary to answer the questions which follow). The buyer believes that the differences are normally distributed and will use this sample to perform an appropriate test at a level of significance of 0.01

$\begin{array}{lll} & \text { Primary } & \text { Secondary } \\ \text { Material } & \underline{\text { Supplier }} &\underline{\text { Supplier } }&\underline{\text { Difference }}\\1 & \$ 55 & \$ 45 & \$ 10 \\ 2 & \$ 48 & \$ 47 & \$ 1 \\ 3 & \$ 31 & \$ 32 & -\$ 1 \\ 4 & \$ 83 & \$ 77 & \$ 6 \\ 5 & \$ 37 & \$ 37 & \$ 0 \\ 6 & \$ 55 & \$ 54 & \$ 1\\\hline \text { Sum: } & \$ 309 & \$ 292 & \$ 17 \\ \text { Sum of Squares: } &\$ 17,573 & \$ 15,472 & \$ 139\end{array}$



-Referring to Table 10-8, the hypotheses that the buyer should test are a null hypothesis that_____versus an alternative hypothesis that_____ .

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Definitions:

Dividend Payout Ratio

A financial metric indicating the percentage of a company's earnings paid out to shareholders in the form of dividends.

Debt-Equity Ratio

Calculating a corporation's financial leverage involves dividing total liabilities by the equity of shareholders.

Net Fixed Assets

Net fixed assets refer to the total value of a company's property, plant, and equipment minus depreciation, representing the actual value of company's long-term assets being used in operations.

Dividend Payout Ratio

The percentage of a company's earnings that is distributed to shareholders in the form of dividends.