SCENARIO 10-14
the Use of Preservatives by Food Processors Has

question 54

Multiple Choice

SCENARIO 10-14
The use of preservatives by food processors has become a controversial issue. Suppose two
preservatives are extensively tested and determined safe for use in meats. A processor wants to
compare the preservatives for their effects on retarding spoilage. Suppose 15 cuts of fresh meat are
treated with preservative I and 15 are treated with preservative II, and the number of hours until
spoilage begins is recorded for each of the 30 cuts of meat. The results are summarized in the table
below.
Preservative I Preservative II $\begin{array}{ll}\text { Preservative I } & \text { Preservative II } \\\bar{X}_{\mathrm{I}}=106.4 \text { hours } & \bar{X}_{\mathrm{II}}=96.54 \text { hours } \\S_{\mathrm{I}}=10.3 \text { hours } & S_{\Pi}=13.4 \text { hours }\end{array}$

-Referring to Scenario 10-14, suppose ? = 0.05. Which of the following represents the result of the relevant hypothesis test?

• A) The alternative hypothesis is rejected.
• B) The null hypothesis is rejected.
• C) The null hypothesis is not rejected.
• D) Insufficient information exists on which to make a decision.

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Definitions:

Capital Rationing

The process of selecting the most profitable projects to invest in when funds are limited.

Capital Budgeting

Capital budgeting involves the process of deciding which long-term investments or projects a company should undertake, based on potential profitability and risk.

Cost of Capital

The minimum earnings rate required by a company on its investment endeavors to maintain market valuation and attract funding.

Budgetary Limit

The maximum amount of money allocated for a specific purpose in a budget.