A Manufacturer Claims That Less Than 1% of All His

question 64

Multiple Choice

A manufacturer claims that less than 1% of all his products do not meet the minimum government standards. A survey of 500 products revealed ten did not meet the standard. If the computed value of z = -2.25 and the level of significance is 0.03, what is your decision?

• A) You reject the null hypothesis, and agree that less than 1% fail to meet government standards.
• B) You have insufficient evidence to reject the null hypothesis.
• C) You reject the alternate hypothesis and agree that less than 1% meet government standards.
• D) You should have used the t-test.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services.

Raw Materials

Basic materials that are used in the manufacturing process to produce goods or finished products.

Product Costs

The costs directly associated with the creation of a product, including direct materials, direct labor, and manufacturing overhead.

Work in Process

Inventory category that includes goods partially through the production process, not yet ready for sale.