Question: Northeastern Franchisers Ltd has a number of clients that use
Northeastern Franchisers, Ltd., has a number of clients that use their process for producing exotic Norwegian dinners for customers throughout New England. The operating cost for the franchised process has a fixed cost of $1,000 per week plus $5 for every unit produced. Recently, a number of restaurant owners using the process have complained that the cost model is no longer valid and, in fact, the weekly costs are higher. Your job is to determine if there is strong evidence to support the owners' claim. To do so, you obtain a random sample of n = 25 restaurants and determine their costs. You also find that the number of units produced in each restaurant is normally distributed with a mean of m = 400 and a variance of s2 = 625. The random sample mean 1n = 252 for weekly costs was $3,050. Prepare and implement an analysis to determine if there is strong evidence to conclude that costs are greater than those predicted by the cost model.
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