SCENARIO 12-1
a Large National Bank Charges Local Companies for Using

question 91

Multiple Choice

SCENARIO 12-1
A large national bank charges local companies for using their services.A bank official reported the results of a regression analysis designed to predict the bank's charges (Y) -- measured in dollars per month -- for services rendered to local companies.One independent variable used to predict service charges to a company is the company's sales revenue (X) -- measured in millions of dollars.Data for
21 companies who use the bank's services were used to fit the model: $$Y _ { i } = \beta _ { 0 } + \beta _ { 1 } X _ { i } + \varepsilon _ { i }$$
Theresultsofthesimplelinearregressionareprovidedbelow.
$$\bar { I } = - 2,700 + 20 X , S _ { Z X } = 65 \text {, two-tail } p \text { value } = 0.034 \text { (for testing } \beta _ { 1 } \text { ) }$$
-Referring to Scenario 12-1, interpret the p-value for testing whether $\beta$ 1 exceeds 0.

• A)There is sufficient evidence (at the \(\alpha\)= 0.05)to conclude that sales revenue (X)is a useful linear predictor of service charge (Y).
• B)There is insufficient evidence (at the \(\alpha\) = 0.10)to conclude that sales revenue (X)is a useful linear predictor of service charge (Y).
• C)Sales revenue (X)is a poor predictor of service charge (Y).
• D)For every $1 million increase in sales revenue, you expect a service charge to increase $0.034.

Understand the consequences of managerial decisions on company-wide performance and inter-divisional relationships.

Evaluate the conditions under which a cost center might be a more appropriate organizational design choice than a profit center.

Grasp the complexities involved in the performance evaluation of profit center managers and the impact of discretion in decision-making.

Understand the relationship between division profits and company-wide profits.

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Definitions:

Avoidance-Avoidance Conflict

A situation where an individual must choose between two negative outcomes.

Avoidance-Avoidance Conflict

A psychological conflict that arises when an individual must choose between two equally unattractive options or actions.

Undesirable Routes

Pathways or approaches that are not preferred or desirable due to various reasons such as inefficiency or risk.

Approach-Avoidance Conflict

A psychological conflict that occurs when a goal is both appealing and unappealing at the same time, leading to ambivalence.