Lind, Marchal,& Wathen text:

18. Refer to the Wage data, which reports information on annual wages for a sample of 100 workers. Also included are variables relating to industry, years of education, and gender for each worker.

a. Which of the 12 variables are qualitative and which are quantitative?

b. Determine the level of measurement for each variable.

Variable

Qualitative/Quantitative

Level of Measurement

Annual wage in dollars

Quantitative

Ratio

Industry

Qualitative

Nominal

Occupation

Qualitative

Nominal

Years of education

Quantitative

Ratio

Southern resident

Qualitative

Nominal

Non-white

Qualitative

Nominal

Hispanic

Qualitative

Nominal

Female

Qualitative

Nominal

Years of work Experience

Quantitative

Ratio

Married

Qualitative

Nominal

Age in years

Quantitative

Ratio

Union member

Qualitative

Nominal

Horngren text

3-41 High-Low Method

Manchester Foundry produced 45,000 tons of steel in March at a cost of £1,150,000. In April, the foundry produced 35,000 tons at a cost of £950,000. Using only these two data points, determine the cost function for Manchester.

Variable cost per tons of steel =

= £20 per tons of steel

Fixed cost per month = total cost less variable cost

At 35,000 tons: per tons of steel

At 45,000 tons: per tons of steel

Therefore, the cost function foe Manchester is

Y (total cost) = £250,000 per month + (£20 number of tons of steel)

Marshall, McManus,& Viele text

The net sales and total assets of the Gateway, Inc show a consistent increasing trend from year 1995 to 1999 (figure 1). The net income of the Gateway, Inc show an increasing trend from year 1995 to 1999 (figure 2), however, the net income has sudden fall in year 1997. Overall, the trends expressed for net sales, total assets, and net income for Gateway, Inc is consistent with each other.

The long-term obligation, net current maturities shows a consistent decreasing trend from year 1995 to 1999 (figure 3). This can be justified as the net sales, total assets, and net income for Gateway, Inc has increasing trend.

The net income trend would be most meaningful to a potential investor in common stock of Gateway, Inc because it can be used to calculate return on investment that is the most important measures of profitability (figure 4). The long-term obligation, net current maturities trend would be least meaningful to a potential investor in common stock of Gateway, Inc.

The net sales, total assets, and net income for Gateway, Inc is given, which are sufficient for making an investment in Gateway, Inc. However, if we have access to working capital (owners’ equity) data than trend for return on investment (ROI), return on equity (ROE) and margin can be easily compared for Gateway, Inc for making an investment in Gateway, Inc.

Figure 1: Net sales and total assets (in millions), 1995-1999

Figure 2: Net Income (in ‘000), 1995-1999

Figure 3: Long-term obligation, net current maturities, 1995-1999

Figure 4: Return on investment (ROI) and net earnings (margin), 1995-1999