Section B Practice Questions

AeroVolt Dynamics decides to test the quality of its turbine sensors. The quality control inspector is told to test the first 20 sensors they find in the warehouse that were manufactured on a Tuesday, and the first 30 they find that were manufactured on a Wednesday. Which sampling method is being used?

Which of the following best describes multistage sampling?

An auditor at a logistics firm wants to review travel expense claims. The claims are numbered sequentially from 0001 to 8000. The auditor uses a random number generator to pick a number between 1 and 40, gets 17, and then selects claims 17, 57, 97, 137, and so on. What sampling technique is this?

A national retail chain wants to audit the cash handling procedures at its 800 stores. The stores are spread across the country, and sending auditors to a simple random sample of 50 stores would result in massive travel expenses. Which sampling method is the most appropriate to minimize travel costs while maintaining a degree of randomness?

A market research firm is conducting street interviews to gauge public reaction to a new synthetic meat product. They do not have a list of residents. The interviewers are instructed to interview 40 men under the age of 30, and 40 women under the age of 30. Which sampling method is being used, and why is it appropriate here?

A company manufactures microchips. The production manager suspects that a specific machine, which produces 10% of the total output, is causing a high defect rate. The other 90% of output comes from newer machines. If the manager wants to sample 200 microchips to investigate this, which method is most appropriate?

In the linear cost equation y = a + bx, what does the 'b' represent?

A logistics company uses the equation y = 12,000 + 2.5x to forecast monthly delivery costs, where x is the number of miles driven. If the company expects to drive 10,000 miles next month, what is the forecasted total variable cost?

Which of the following statements about the linear function y = a + bx is true?

A factory has the following data: Month 1 (1,000 units, $14,000), Month 2 (1,500 units, $18,000), Month 3 (1,200 units, $19,000), Month 4 (800 units, $13,000). Using the high-low method, what is the variable cost per unit?

Using the high-low method, a company determines its variable cost is $4 per unit. At the highest activity level of 5,000 units, total costs were $35,000. What are the total fixed costs?

A company's highest activity is 10,000 units (cost $50,000) and lowest is 4,000 units (cost $30,000). However, fixed costs step up by $2,000 when production exceeds 8,000 units. What is the variable cost per unit?

Which of the following is the primary disadvantage of the high-low method?

Why might a small business choose to use the high-low method instead of linear regression?

If the highest activity period in a dataset contains a massive, one-off abnormal cost, what impact will this have on the high-low calculation?