Recent Revenue Shortfalls in a Midwestern State Led to a Reduction

question 48

Multiple Choice

Recent revenue shortfalls in a Midwestern state led to a reduction in the state budget for higher education.To offset the reduction,the largest state university proposed a 25% tuition increase.It was determined that such an increase was needed to simply compensate for the lost support from the state.Random samples of 50 freshmen,50 sophomores,50 juniors,and 50 seniors from the university were asked whether or not they were strongly opposed to the increase,given that it was the minimum increase necessary to maintain the university's budget at current levels.The results are given in the following table. Suppose we wish to test the null hypothesis that there is no association between year in school and opinion.Under the null hypothesis,what is the expected number of strongly opposed seniors?

• A)18
• B)25
• C)30.5
• D)50

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Definitions:

Bad Debt Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect and has written off.

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable and record bad debts expense.

Percent of Sales Method

A financial forecasting technique that estimates certain balance sheet and income statement items as a fixed percentage of projected sales.

Uncollectible Expenses

Costs that a business incurs from credits extended to customers that are not expected to be paid back, often recognized as bad debt expense.