Before a New Phone System Was Installed, the Amount a Company

question 50

Multiple Choice

Before a new phone system was installed, the amount a company spent on personal calls followed a normal distribution with an average of $500 per month and a standard deviation of $50 per month. Refer to such expenses as PCE's (personal call expenses) . Find the point in the distribution below which 2.5% of the PCE's fell.

• A) $402.00
• B) $598.00
• C) $12.50
• D) $487.50

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Definitions:

Residual Value

The estimated value that an asset will have at the end of its useful life, often used in calculating depreciation.

Indirect Method

A method used in the preparation of cash flow statements, where net income is adjusted for non-cash transactions, deferrals, and accruals to calculate net cash from operating activities.

Operating Activities

Activities directly related to the production and delivery of goods and services, which are central to a company's operations and cash flow.

Residual Value

The estimated amount that an asset is expected to be worth at the end of its useful life.