The Big Toy House is a local company that specializes in selling children outdoo
ID: 2960222 • Letter: T
Question
The Big Toy House is a local company that specializes in selling children outdoor playhouses. With many businesses there is a certain amount of difficulty in collecting money on past due accounts. This has become a concern of the owner. A recent trade magazine indicated that the national averages for account receivable were: 65% current, 25% late, and 10% not collectable. A recent study of the company’s records indicated that 60 percent of the account receivable is current. Thirty percent of the accounts were late and the remaining 10% of receivable were viewed as being not collectable. To determine if his store was in-line with the national average, the manager had a statistical analysis performed. The chi square test was selected for the analysis and the .05 significant level was used. The test statistics was X² = 6.725. What is the correct decision regarding this result?A. The manager needs to not be concerned.
B. The distribution of Big Toy House receivables is different than the national averages.
C. The two distributions cannot be compared.
D. The distribution of Big Toy House receivables is in-line with the national averages.
Explanation / Answer
Given test statistic chi-square = 6.725 degrees of freedom =2 From chi-square table values we get at 2 degrees of freedom with level of significant 0.05 is 5.991 Here the test statistic is more than critical value so we reject our hypothesis. D. The distribution of Big Toy House receivables is in-line with the national averages.Related Questions
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