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 2.8 and 5.7, respectively. Is this sample sufficient to conclude that the two production departments differ in terms of unit cost variance

Answer 1

We can conclude that the result is significant and production differ in cost variance.

Explanation:

Given :

n1 = 16

n2 = 16

s1² = 5.7

s2² = 2.8

α = 0.10

H0 : σ1² = σ2²

H1 : σ1² ≠ σ2²

The test statistic :

Ftest = s1² / s2² =

Ftest = 5.7 / 2.8

Ftest = 2.036

Using the Pvalue from Fratio calculator :

df numerator = 16 - 1 = 15

df denominator = 16 - 1 = 15

Pvalue(2.036, 15, 15) = 0.0898

Pvalue = 0.0898

Since the Pvalue is < α ; We can conclude that the result is significant and production differ in cost variance.