A Cost Accountant Wished to Establish the Average Amount $\mu$ ,Spent by Executives Per Day on Travel and Lodging

question 146

Short Answer

A cost accountant wished to establish the average amount, $\mu$ ,spent by executives per day on travel and lodging.Then a comparison,between the average and the amount turned in to be reimbursed,will be made and unreasonably high or low expense amounts audited.A random sample of 50 executive expense receipts is taken.The average in the sample was $208.From a similar survey the standard deviation of the amounts is approximately $\text { σ}$ = $29.The accountant prepares a 90-percent confidence level for $\mu$ .How would the auditor use these data to determine if an audit should be conducted?

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Definitions:

Rectification

The legal process of correcting an error or omission in a document to reflect the true intention of the parties involved.

Comma

A punctuation mark indicating a pause between parts of a sentence or used to separate items in a list.

Freight Rebates

Discounts or refunds given by carriers or warehouse operators on freight charges under certain conditions.

Equitable Remedy

A judicial order enforcing a right or redressing a wrong, guided by principles of equity rather than strict legal rules.