Some accounting firms give the client an option to pay a fee when the tax return

Question

Some accounting firms give the client an option to pay a fee when the tax return is completed that guarantees tax advices and support from the accountant if the client were audited. A large accounting firm is trying to determine what fee to charge for next year's returns. In previous years, the actual mean cost to the firm for attending a client audit session was $710. To determine if this cost has changed, the firm randomly samples 37 client audit fees. The sample mean audit cost was $680 with a standard deviation of $85. Complete parts a and b below. a) Develop a 90% confidence interval estimate for the mean audit cost The 90% confidence interval for the mean audit cost is (S (Round to the nearest dollar as needed.) b) Based on your confidence interval, what do you think of the claim that the mean cost has changed? OA. The interval does not contain the historical mean $710, which supports the claim that the mean cost has changed OB. The interval contains the historical mean $710, which supports the claim that the mean cost has changed OC. The interval contains the historical mean $710, which does not support claim that the mean cost has changed OD. The interval does not contain the historical mean $710, which does not support the claim that the mean cost has changed.

Explanation / Answer

Sol:

alpha=1-0.9=0.1

alpha/2=0.1/2=0.05

df=n-1=37-1=36

t crit=1.688

90% cconfidence interval is

sample mean-tcrit(sampelsd/sqrt(n),sample mean+tcrit(sampelsd/sqrt(n)

680-1.688(85/sqrt(37), 680+1.688(85/sqrt(37)

656,704(rounding to nearets integer)

lower limit=656

upper limit=704

SOlutionb:

710 is out of range

interval does not contain

Do not support gthe claim

OPTIOND

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.