The budgets for each of the three cost centres and the actual monthly expenditures that occurred for

the last calendar year are given in the Excel spreadsheet. (This is, of course, a confidence interval

problem where you should use = 0:05. The upper limit of this interval should be your recommended

budget. Also, note that we only have 12 observations, but the facility has been operating for a long,

long time. That is to say, for each centre, you have a sample from a large population. )

(a) We would like to know if the budgets were appropriate. If not, what budget levels would you

recommend for each cost centre? If your recommendation is implemented, there should be a

.small.chance of the true (but unknown) average monthly expenditures exceeding the budget.

(b) In your analysis in Part (a) above, how large should the sample size be to ensure that your margin

of error is $1,000? For this part, use MegaStat.s own method of finding sample sizes using

.Confidence Intervals > Sample Size,.and substitute your standard deviation in the

Std. Dev. box.

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