Seat

Number

Diploma of Commerce
PRACTICE EXAM PAPER – 1 - SOLUTIONS
September/October 2019
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Unit Code: MIS171 / MISP171
Unit Name: Business Analytics
Reading Time: 15 minutes
Writing Time: 2 hours
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Deakin College Student ID No: …………………………………………………………………………………………

(MQP) Deakin College ID No: ……………………………………………………………………………………………

READ INSTRUCTIONS BEFORE COMMENCING

DO NOT COMMENCE WRITING UNTIL INSTRUCTED TO DO SO

Note: A tick () in a box indicates the instruction applies.

A blank box indicates the instruction does not apply.
Questions Possible Actual
Marks Marks
 This exam is a closed book exam. 1 10

2 10
 This exam is an open book exam. 3 10

4 10
 You may use a (non-electronic) dictionary.
5 10

6 10
 You may use a calculator.
Total 60

THIS EXAMINATION PAPER MUST NOT BE REMOVED FROM THE EXAMINATION ROOM

YOU MUST NOT HAVE ANY UNAUTHORISED MATERIAL IN YOUR POSSESSION DURING
THE EXAM
Exam instructions:
1. This examination consists of 6 main questions and is marked out of 60 marks. It represents 60% of the
total assessment in this unit.

2. This exam is an open book exam. This means any printed material may be brought into the examination
room.

3. Apart from a non-programmable calculator, other electronic devices are not permitted.

Examination Materials:

Please inform your examination supervisor immediately if you do not have a complete copy of the following
examination materials.

1. Examination Booklet (16 pages).

a. Ensure you have written your Student ID and the Unit Code on the answer sheet.
b. To obtain full marks for numerical questions, workings must be shown.
c. Use the blank pages of this booklet for rough working. Clearly mark which questions the rough working is
for.
d. Students are not permitted to keep any part of this examination paper.

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Question 1 This question contains 2 parts [2.5+7.5] = 10 Marks

A manufacturer of automobile parts claims that less than 5% of his product needs refixing weekly. He
produces, on average, 1000 parts per week. When 100 parts were drawn from a week’s manufacture,
8% were found to be refixed.

a. What is the variable of interest? (0.5 mark)

Automobile parts that need refixing weekly
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b. What is the population of interest? (0.5 mark)
All parts that need refixing
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c. What is the parameter the owner needs? (0.5 mark)
The average number of all parts that need refixing
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d. What is the sample? (0.5 mark)
100 parts
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e. What is the statistic? (0.5 mark)
Average of the sample (that needs refixing)
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Question 1 continued.

The following summary statistics relate to information collected from the sampled 10 Regional Businesses
which included Managers Annual Salary (in $ ‘000). Ten of these salaries are summaried and presented in the
table below.

Exhibit 1 Data set

20 68 75 80 85
65 72 78 82 91

Exhibit 1.2 Summary statistics

71.6
Mean
Standard Error 6.241794614
Median 76.5
Mode #N/A
Standard Deviation 19.73828767
Sample Variance 389.6
Kurtosis 6.133794374
Skewness -2.27559377
Range 71
20
Minimum
Maximum 91
Sum 716
10
Count
Q1 69
81.5
Q3
IQR 12.5
Lower fence 50.25
100.25
Upper fence

a. Determine the type and scale of this variable ‘Managers Annual Salary (in $ ‘000)’.
Numerical / Ratio

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b. Calculate and fill in the blanks (shaded) of the above descriptive summary statistics table. Show your
workings below.

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Question 1 Continued

1.2

c. Using the summary measures from Exhibit 1.2.

I. Describe the shape of the data for the variable ‘Managers Annual Salary (in $ ‘000)’ and explain how
have you come to this decision? (0.5 mark)
The shape is negative. The skewness is given as -2.28. This means that the relationship is negatively
skewed. Further the mean (71.6) is less than the median (76.5). This also confirms that the shape is
negative.

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II. Specify if there are any unusual values in the data set. Provide reasons (0.5 mark)
When there is a value that is less than lower fence or greater than upper fence, such values are
considered as unusual. Lower fence is 50.25. The minimum value is 20. Therefore 20 is an unusual
value.

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d. Do you think the sample data used in part (a) is a suitable size for inferential Statistics, Explain? (0.5
mark)

Well, this depends largely on how accurate you want your survey data to be. In other words, how
closely you want your results to match those of the entire population. A good rule of thumb is that
the ratio of sample size to population size (n/N) should be approx. 10%, but sample size should not
exceed 1000.
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Question 1 Continued

1.2

e. Based on your results from Exhibit 1.2.2., write a brief report in plain language about the variable
‘Managers Annual Salary (in $ ‘000)’, highlighting the most important characteristics.

Mean: 71.6
A manager in regional business would earn $71,600 on average.
Median: 76.5
50% of the managers earn greater than $76,500 and 50% of the managers earn less than $76,500
Range: 71
The range of salary earned by a manager is $71,000
Minimum: 20 Maximum: 91
A manager would earn a minimum of $20,000 to $91,000
Q1: 69
25% of the managers earn less than or equal to $69,000
Q3: 81.5
25% of the managers earn greater than or equal to $81,500
IQR: 12.5
The range of middle 50% of salaries is $12,500

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Question 2 This question contains 2 parts [5+5] = 10 Marks
The general manager has instructed your team to investigate whether there is a relationship between
sales revenue and advertising expenditure. Your colleague has produced a scatter diagram and a cross
tabulation and now she wants you to complete the rest of the report to the general manager.

a. Out of the two variables mentioned above, what would be the explanatory variable?
Advertising

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b. Below is a partially completed cross tabulation. Fill in the four (4) missing entries.

Advertising $’000

Sales $m Less than 25 25-50 More than 50 Total

Less than or Equal to 10 26 33

4 63

More than 10 3 40 44 87

Total 29 73 48 150

c. Complete the following column percentage cross tabulation.

Advertising $’000

Sales $m Less than 25 25-50 More than 50 Total

Less than or Equal to 10 (26/29)(100) = 89.7% (33/73)(100) = 45.2% (4/48)(100) = 8.3% 42.0%

More than 10 10.3% 54.8% 91.7% 58.0%

Total 100.0% 100.0% 100.0% 100.0%

d. In one or two paragraphs, describe the relationship between sales revenue and
advertising expenditure (if any) using key figures from your analysis above. Ensure you
use plain language that the general manager can understand.

It can be seen from the above table that there are considerable differences in the
percentages as we move across the row or down the columns. This indicates that there is
a relationship between Advertising expenditure and Sales. For example the highest
percentage of sales of more than $10m occurs when advertising expenditure is greater than
$50 m

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Question 2 continued

Osmidium industries is producing a new model of electric car. While testing the prototype the quality
control engineer confirms that battery capacity will allow on average 500.00 km between charging with
a standard deviation of 50.0 km. The quality control engineer also establishes that the distribution of
kilometres travelled between charging follows a Normal Distribution.

a. Determine the probability that a car selected at random will be able to travel in at most 600.0 km before
requiring to be recharged. (Draw diagrams if necessary)

Z = (X – μ)/σ= (600.0 – 500.0)/50.0 = 2.0 Require P(X ≤ 2.0)

P(X ≤ 2.0) = 0.4772 + 0.5 = 0.9772 = 97% (Use the Table E.14 given in Moodle to find the
corresponding value for 2.0)

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(b) Determine the probability that a car selected at random will be able to travel between 425.0 km and
575.0 km.

Z1= (X – μ)/σ= (425.0 – 500.0)/50.0 = -1.5 Z2= (X – μ)/σ= (575.0 – 500.0)/50.0 =1.5

Require P(-1.5 < Z < 1.5) = 2(0.4332) = 0.8664

(c) Determine the probability that a car selected at random will be able to travel more than 400.0 km.

Z = (X – μ)/σ > (400.0 – 500.0)/50.0 = -2.0

= 0.4772 + 0.5 = 0.9772

(d) Determine the minimum distance travelled by cars who are the top 20% of km travelled.

Need to find the Z value in the Standard Normal Table that corresponds to 0.5000 – 0.2000 = 0.3000
Closest value in table = 0.2995 which corresponds to Z = 0.84
Then using formula: Z = (X – μ)/σ we have: X = Zσ+ μ = (0.84)(50.0) + 500.0 = 542.0
Anwser: 542.0 Km
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Question 3 This question contains 5 parts [3+1+3+1+2] = 10 Marks

The following summary output depicts a multiple regression model that attempts to estimate the
Productivity of an employee at Osmidium Industries based on four explanatory variables:

 X1 =Age (in years)

 X2 = Education (number of years of post -secondary education)

 X3 = Income (gross annual income ($’00,000)

 X4 = Wealth (total wealth of the individual in $’00,000)

Use the output shown above to answer the following:

(a) Are all the explanatory variables currently in the model significant predictors of productivity?
Explain fully.
Since the respective p-values for all explanatory variables are < 0.05 then all variables are
significant predictors of productivity

(b) How well does the regression model explain variation in productivity? Explain fully.

The coefficient of multiple determination R Square = 0.9465 or 94.65%. The model is very strong.

(c) Interpret the following coefficients from the output:

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 (i) Intercept (b0)

According to the model if all explanatory variables are zero then on average productivity of such an
employee would be -12432.46 (meaningless)

(ii) Age (b1)

According to the model if all other explanatory variables remain constant then on average every extra year
of age will result in an increase of productivity of approx. 325

(iii) R Square (coefficient of determination)

 94.65% of the variation in productivity is explained by the joint variation of all explanatory
variables currently included in the model.
 The remaining 5.35% is attributed to other factors
 The model is very strong

(d) Write the regression equation for the model. You can round off relevant values to 2 decimal
places. Ŷ = - 12432.46 + 325.07X1 + 773.38X2 + 0.16X3 + 0.07X4

(e) Use the regression model to predict the productivity of an employee with the following
profile.
 Age = 40 years
 Education = 5 years
 Income $200,000
 Wealth = $1,000,000

Ŷ = - 12432.46 + 325.07(40) + 773.38(5) + 0.16(2) + 0.079(10) = 4438.35

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Question 4 This question contains 6 parts [2+1+1+1+2+3] = 10 Marks

Proton Industries has developed a new lithium battery for their latest model of electric car.
 A rival company is advertising a battery that lasts on average 480.0 km before needing a recharge.
 Proton Industries claim that the average distance that can be travelled on a single charge using their
new battery exceeds 480.0 km.

A random sample of 36 batteries was selected and tested to determine the mean distance that could be
achieved on a single charge. The statistics are shown below:
= 500.0 km s = 35.4
Using the six-step approach to hypothesis testing evaluate the claim made by Proton Industries at the 5.0%
level of significance.
Step 1: Write down in symbols and words the null and alternative hypotheses.
H0: μ ≤ 480.0 (average life of battery delivers less than or equal to 480.0 km)

Ha: μ > 480.0 (average life of battery delivers more than 480.0 km
Step 2: State the type of test you are conducting
Upper Tail (Mean)
Step 3: Using a level of significance (α) of 5%, determine the critical value(s).
Using the t-distribution table: degrees of freedom = 36-1 = 35 and upper tail area = 0.05
Then critical value of t = 1.6896
Step 4: Write your decision rule. (A diagram may be helpful.)
If the test-statistic > 1.6896 then reject H0
Step 5: Calculate your test statistic.

Test-statistic = ( - μ )/(s/√n) = (500.0 – 480.0)/(35.4/√36) = 20/5.9 = 3.39

Step 6: State your decision. Do you believe there is evidence to suggest Proton management
purchase the land for their store?
Since the test-statistic > critical value we reject H0 and accept the claim.

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