Use the Following Information to Answer Questions (5) - (7)

question 51

Multiple Choice

Use the following information to answer questions (5) - (7) . A tire manufacturer has made some
modifications to its most popular tire and wants to see if the tread on the modified tire will last
longer than the original tire. Because there is much variation in the way people drive, the
manufacturer decides to use blocking to reduce this variation. Twenty cars will be used to test the
tires. Ten cars are randomly selected to receive an original tire on the right rear wheel and a
modified tire on the left rear wheel. The remaining ten cars will receive an original tire on the left
rear wheel and a modified tire on the right rear wheel. Each car will then be driven 10,000 miles and
the amount of wear recorded for each wheel.
-Is this a correct use of blocking?

• A)Yes
• B)No

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Definitions:

Cost Behavior

The way in which a cost changes in relation to changes in activity levels, categorized into fixed, variable, and mixed costs.

Margin Of Safety

A figure that indicates the possible decrease in sales that may occur before an operating loss results; may be expressed in terms of sales dollars, sales units, or percent of current sales.

Unit Selling Price

The price at which a single unit of a product or service is sold, not accounting for discounts or modifications.

Sales

The revenue generated from the sale of goods or services by a company during a particular period.