Sarah's Talking Dolls manufactures a computer chip used in the production of dolls for children. When 5,000 dolls are produced, the costs per part are:
Sam's Associates has offered to sell Sarah's Talking Dolls 5,000 parts for $5.75 each. If Sarah accepts the offer, fixed manufacturing costs will decrease by $1.00 per unit.
A) What is the relevant per unit cost to manufacture the part?
B) Which alternative is best for Sarah's Talking Dolls and by how much?
Definitions:
Test Statistic
A value calculated from sample data during a hypothesis test.
Null Hypothesis
A hypothesis that states there is no difference or effect, serving as the default assumption to test against in statistical hypothesis testing.
Alternative Hypothesis
A statistical hypothesis that proposes a difference or effect, contrasting the null hypothesis.
Expected Frequencies
The anticipated counts in each category of a contingency table assuming no association between the variables.
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