Management And Accounting Web

# Management Accounting: Concepts, Techniques & Controversial IssuesChapter 3: Part IISolutions

James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Problem 3-9

1. d

2. a (c if 2 standard deviations are used to establish the limits.)

3. a

4. b

5. a

6. c

7. c

8. a

9. a

10. b

Problem 3-10

1. The grand mean is 11.69. The mean of the ranges is .54.

The values for the equation below are from Exhibit 3-9 and based on 6 items per sample.

The upper limit is 11.69 + (.483)(.54) = 11.95

The lower limit is 11.69 - (.483)(.54) = 11.429

2. The limits for the range are based on the following equations.

The upper limit is (2.004)(.54) = 1.08216

The lower limit is (0)(.54) = 0

3. Yes the process appears to be in control since all ten means are within the limits, although some of the individual observations are outside the limits.

Problem 3-11

The original grand mean is 129.6/12 = 10.8

The new grand mean is 120/12 = 10

Note that every point in the new set of data is below the original mean. Unless the truck is being used for a different purpose (e.g., city driving vs. highway, heavy loads vs. light loads), it appears that it might be time for a tune up. Another possibility is that a different type of gas is being used. A different driver who drives less economically could also cause different results.