Administration question

june4classexercise.docx

Home >Business & Finance homework help >Accounting homework help >Administration question

ADMN 210 -- Dr. Barbara Sirotnik

Class Exercise, June 4, 2015

Consider problem #46 on page 366. It says that a senior accountant for a firm notes that the fee charged by the firm’s accountants depends on the complexity of the return. A comparison of actual charges therefore might not provide the information needed to set next year’s fees. To better understand the fee structure, the senior accountant requests a new sample that measures the time the accountants spent on the audit. Last year, the average hours charged per client audit was 3.25 hours. A new sample of 10 audit times shows the following times in hours:

4.2 hours, 3.7, 4.8, 2.9, 3.1, 4.5, 4.2, 4.1, 5.0, 3.4 hours

a) Enter the data into excel.

b) Calculate descriptive statistics for the hours charged.

c) Find the 90% confidence interval estimate for the true mean audit time.

d) Based on your answer to parts b and c, do you think that mean hours have significantly increased over the 3.25 hours from last year? Comment.

e) Now conduct a formal hypothesis test (using the six step method) to determine if average hours (and therefore fees) have increased. Use all 6 steps of the hypothesis testing method.

f) What is the p-value of the test you conducted in part d?

Please turn in your Excel printout (hard copy) and hand-written answers to the questions. It is due by class time on June 9.