The Oxnard Retailers Anti-Theft Alliance (ORATA) Published a Study That

question 20

Multiple Choice

The Oxnard Retailers Anti-Theft Alliance (ORATA) published a study that claimed the causes of disappearance of inventory in retail stores were 30 percent shoplifting, 50 percent employee theft, and 20 percent faulty paperwork. The manager of the Melodic Kortholt Outlet performed an audit of the disappearance of 80 items and found the frequencies shown below. She would like to know if her store's experience follows the same pattern as other retailers. $$\begin{array} { | l | c | c | c | } \hline \text { Reason } & \text { Shoplifting } & \text { Employee Theft } & \text { Poor Paperwork } \\\hline \text { Frequency } & 32 & 38 & 10 \\\hline\end{array}$$ Under the null hypothesis that her store follows the published pattern, the expected number of items that disappeared due to shoplifting is:

• A)16.
• B)40.
• C)24.
• D)27.

---

Definitions:

Market Decline

A decrease in the overall value of a market, evidenced by falling asset prices and often associated with economic downturns.

Inventory Valuation

A process used to determine the cost associated with an inventory at the end of a financial period, affecting the cost of goods sold and net income.

Average Cost Method

An inventory valuation method that calculates the cost of goods sold and ending inventory based on the weighted average cost of all items available for sale.

Average Cost

An inventory costing method where the cost of goods sold and ending inventory is determined by taking the weighted average of all units purchased.