Be sure to have a calculator and Table Z handy. A small restaurant wants to dete

Question

Be sure to have a calculator and Table Z handy.

A small restaurant wants to determine how much weekly revenue is needed to pay all expenses. The owner knows that 96% of the time, the revenue is sufficient to pay expenses. Another way to consider the question is to find how much revenue leads to not meeting expenses, which is a 4% chance of not being able to pay all expenses for the week. The distribution of weekly revenue for this restaurant is normal with a mean of $1,328 and a standard deviation of $230. Find the revenue amounts for which expenses are met.

Explanation / Answer

a 96% area under curve gives us z value of 1.75 (we see that 0.9599 is the closest area we get)

thus we need to find x for (x-1328)/230 =1.75

therefore x=1730.5

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