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Using samples of 197 credit card statements, an auditor found the following: Sample 1   3 errors Sample 2   3 errors Sample 3   5 errors Sample 4    9 errors 1. what alpha risk would control limits of .0470 and .0038 provide? 2. Using control limits of .0470 and .0038, is the process in control? 3. Construct a control chart for the process, assuming a fraction defective of 2 percent, using two-sigma control limits.  Is the process in control?

Using samples of 197 credit card statements, an auditor found the following: Sample 1   3 errors Sample 2   3 errors Sample 3   5 errors Sample 4    9 errors 1. what alpha risk would control limits of .0470 and .0038 provide? 2. Using control limits of .0470 and .0038, is the process in control? 3. Construct a control chart for the process, assuming a fraction defective of 2 percent, using two-sigma control limits.  Is the process in control?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Using samples of 197 credit card statements, an auditor found the following:

Sample 1   3 errors

Sample 2   3 errors

Sample 3   5 errors

Sample 4    9 errors

1. what alpha risk would control limits of .0470 and .0038 provide?

2. Using control limits of .0470 and .0038, is the process in control?

3. Construct a control chart for the process, assuming a fraction defective of 2 percent, using two-sigma control limits.  Is the process in control?

 

**Audit Analysis of Credit Card Statements** Using samples of 197 credit card statements, an auditor found the following: Refer to [Table-A](#). | Sample | 1 | 2 | 3 | 4 | |--------|---|---|---|---| | Number with errors | 3 | 3 | 5 | 9 | The table above illustrates the number of errors found in four different samples of credit card statements. Each sample represents a subset of the 197 statements reviewed. The errors identified were distributed as follows: - In Sample 1, there were 3 errors. - In Sample 2, there were 3 errors. - In Sample 3, there were 5 errors. - In Sample 4, there were 9 errors. This data helps in understanding the frequency and distribution of errors across different samples, which may further assist in refining auditing processes or identifying areas needing attention.
Transcribed Image Text:**Audit Analysis of Credit Card Statements** Using samples of 197 credit card statements, an auditor found the following: Refer to [Table-A](#). | Sample | 1 | 2 | 3 | 4 | |--------|---|---|---|---| | Number with errors | 3 | 3 | 5 | 9 | The table above illustrates the number of errors found in four different samples of credit card statements. Each sample represents a subset of the 197 statements reviewed. The errors identified were distributed as follows: - In Sample 1, there were 3 errors. - In Sample 2, there were 3 errors. - In Sample 3, there were 5 errors. - In Sample 4, there were 9 errors. This data helps in understanding the frequency and distribution of errors across different samples, which may further assist in refining auditing processes or identifying areas needing attention.
Using samples of 197 credit card statements, an auditor found the following: Use [Table-A](#). | Sample | 1 | 2 | 3 | 4 | |------------------|---|---|---|---| | Number with errors | 3 | 3 | 5 | 9 | **Explanation:** The table displays data from four samples of credit card statements. For each sample, the number of statements with errors is recorded: - Sample 1: 3 errors - Sample 2: 3 errors - Sample 3: 5 errors - Sample 4: 9 errors
Transcribed Image Text:Using samples of 197 credit card statements, an auditor found the following: Use [Table-A](#). | Sample | 1 | 2 | 3 | 4 | |------------------|---|---|---|---| | Number with errors | 3 | 3 | 5 | 9 | **Explanation:** The table displays data from four samples of credit card statements. For each sample, the number of statements with errors is recorded: - Sample 1: 3 errors - Sample 2: 3 errors - Sample 3: 5 errors - Sample 4: 9 errors
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