The accounting department analyzes the variance of the weekly unit costs reporte

Question

The accounting department analyzes the variance of the weekly unit costs reported by two production departments. A sample of 16 cost reports for each of the two departments shows cost variances of 2.2 and 5.6, respectively. Is this sample sufficient to conclude that the two production departments differ in terms of unit cost variance? Use = .10. State the null and alternative hypotheses. 0: 12 22 a: 12 22

Calculate the value of the test statistic (to 2 decimals).

The p-value is

What is your conclusion?

Explanation / Answer

Solution:

Given that
n1 = 16, s1^2 = 5.6
n2 = 16, s2^2 = 2.2
Test hypothesis:
H0: 1^2 = 2^2
H1: 1^2 2^2
Test statistic:
F = s1^2/s2^2 = 5.6/2.2 = 2.54
P-value = 0.0111
P-value < 2.54 so reject null hypothesis

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