Hospital length of stay. Health insurers and the federal government are both putting pressure on hospitals to shorten the average length of stay (LOS) of their patients. The average LOS in the United States is $4.5$ days (Healthcare Cost and Utilization Project Statistical Brief, October 2014). A random sample of 20 hospitals in one state had a mean LOS of $3.8$ days and a standard deviation of $1.2$ days. Use a $90 \%$ confidence interval to estimate the population mean LOS for the state's hospitals.

MGM Resorts International owns and operates hotels and casinos including the MGM Grand and the Bellagio in Las Vegas, Nevada. As of a recent year, MGM reported accounts receivable of $415,654,000 and allowance for doubtful accounts of$93,760,000. Johnson & Johnson manufactures and sells a wide range of healthcare products including Band-Aids and Tylenol. As of a recent year, Johnson & Johnson reported accounts receivable of $10,114,000,000 and allowance for doubtful accounts of$340,000,000. a. Compute the percentage of the allowance for doubtful accounts to the accounts receivable for MGM Resorts International. Round to one decimal place.

Merck & Co., Inc. and Johnson & Johnson are two leading producers of healthcare products. Each has considerable assets, and each expends considerable funds each year toward the development of new products. The development of a new healthcare product is often very expensive, and risky. New products frequently must undergo considerable testing before approval for distribution to the public. For example, it took Johnson & Johnson 4 years and $200 million to develop its 1-DAY ACUVUE contact lenses. Below are some basic data compiled from the financial statements of these two companies.

$$\begin{array}{lccc} {\text{(all dollars in millions)}}&\underline{\hspace{2pt}\text{Johnson \& Johnson}\hspace{2pt}}&\underline{\hspace{15pt}\text{Merck}\hspace{15pt}}\\ \text{Total assets}&\$53,317&\$42,573\\ \text{Total revenue}&47,348&22,939\\ \text{Net income}&8,509&5,813\\ \text{Research and development expense}&5,203&4,010\\ \text{Intangible assets}&11,842&2,765\\ \end{array}$$

Instructions

a. What kinds of intangible assets might a healthcare products company have? Does the composition of these intangibles matter to investors-that is, would it be perceived differently if all of Merck's intangibles were goodwill than if all of its intangibles were patents?

b. Suppose the president of Merck has come to you for advice. He has noted that by eliminating research and development expenditures the company could have reported $4 billion more in net income. He is frustrated because much of the research never results in a product, or the products take years to develop. He says shareholders are eager for higher returns, so he is considering eliminating research and development expenditures for at least a couple of years. What would you advise?

c. The notes to Merck's financial statements note that Merck has goodwill of$1.1 billion. Where does recorded goodwill come from? Is it necessarily a good thing to have a lot of goodwill on a company's books?

Suppose a random sample of n measurements is selected from a binomial population with probability of success $p = .2$. For each of the following values of n, give the mean and standard deviation of the san1pling distribution of the sample proportion, $\hat{p}$.

$$n = 400$$

Which of the following is NOT a consideration when selecting recommended best practices?

• a) organization structure is similar.
• b) threat environment is similar.
• c) resource expenditures are practical.
• d) same certification and accreditation agency or standard.

According to scientists, the cockroach has had 300 million years to develop a resistance to destruction. In a study conducted by researchers for S. C. Johnson & Son, Inc. (manufacturers of Raid and Off), 5,000 roaches (the expected number in a roach-infested house) were released in the Raid test kitchen. One week later, the kitchen was fumigated and 16,298 dead roaches were counted, a gain of 11,298 roaches for the 1-week period. Assume that none of the original roaches died during the 1-week period and that the standard deviation of x , the number of roaches produced per roach in a 1-week period, is 1.5. Use the number of roaches produced by the sample of 5,000 roaches to find a 95% confidence interval for the mean number of roaches produced per week for each roach in a typical roach-infested house.

Accounting and Machiavellianism. Refer to the Behavioral Research in Accounting (January 2008) study of Machiavellian traits in accountants, Exercise $6.19$ (p. 317). A Mach rating score was determined for each in a random sample of 122 purchasing managers, with the following results: $\bar{x}=99.6, s=12.6$. Recall that a director of purchasing at a major firm claims that the true mean Mach rating score of all purchasing managers is 85 . Suppose you want to test the director's claim. Specify the null and alternative hypotheses for the test.

In Psychological Science (Vol. 22, 2011), researchers reported that a chief executive officer's facial structure can be used to predict a firm's financial performance. The study involved measuring the facial width-to-height ratio (WHR) for each in a sample of 55 CEOs at publicly traded Fortune 500 firms. These WHR values (determined by computer analyzing a photo of the CEO's face) had a mean of $\bar{x}=1.96$ and a standard deviation of $s = .15$. The researchers found that CEOs with wider faces (relative to height) tended to be associated with firms that had greater financial performance. They based their inference on an equation that uses facial WHR to predict financial performance. Suppose an analyst wants to predict the financial performance of a Fortune 500 firm based on the value of the true mean facial WHR of CEOs. The analyst wants to use the value of $\mu=2.2$. Do you recommend he use this value?

Accounting and Machiavellianism. Refer to the Behavioral Research in Accounting (January 2008) study of Machiavellian traits in accountants, Exercise $6.19$ (p. 317). A Mach rating score was determined for each in a random sample of 122 purchasing managers, with the following results: $\bar{x}=99.6, s=12.6$. Recall that a director of purchasing at a major firm claims that the true mean Mach rating score of all purchasing managers is 85. Find the value of the test statistic.

Accounting and Machiavellianism. Refer to the Behavioral Research in Accounting (January 2008) study of Machiavellian traits in accountants, Exercise $6.19$ (p. 317). A Mach rating score was determined for each in a random sample of 122 purchasing managers, with the following results: $\bar{x}=99.6, s=12.6$. Recall that a director of purchasing at a major firm claims that the true mean Mach rating score of all purchasing managers is 85. Use the result, part c, to make the appropriate conclusion.

Accounting and Machiavellianism. Refer to the Behavioral Research in Accounting (January 2008) study of Machiavellian traits in accountants, Exercise $6.19$ (p. 317). A Mach rating score was determined for each in a random sample of 122 purchasing managers, with the following results: $\bar{x}=99.6, s=12.6$. Recall that a director of purchasing at a major firm claims that the true mean Mach rating score of all purchasing managers is 85. Give the rejection region for the test using $\alpha=.10$.

Executive Compensation Scoreboard. Refer to the Glassdoor Economic Research (August 25, 2015) report on salaries of executives and workers at S&P 500 firms. Recall that the data file contains the salaries (in $millions) of the 441 CEOs who participated in the survey. Suppose you are interested in estimating the mean salary for these$441 $\mathrm{CEOs}. Use the information, parts c and d, to form a$99 \%$ confidence interval for the true mean salary of the 411 CEOs in the survey.

Executive Compensation Scoreboard. Refer to the Glassdoor Economic Research (August 25, 2015) report on salaries of executives and workers at S&P 500 firms. Recall that the data file contains the salaries (in $ millions) of the 441 CEOs who participated in the survey. Suppose you are interested in estimating the mean salary for these 441 CEOs. Obtain a random sample of 50 salaries from the data set.

Executive Compensation Scoreboard. Refer to the Glassdoor Economic Research (August 25, 2015) report on salaries of executives and workers at S&P 500 firms. Recall that the data file contains the salaries (in $millions) of the 441 CEOs who participated in the survey. Suppose you are interested in estimating the mean salary for these$441 $\mathrm{CEOs}. Find the true mean salary of the 411 CEOs and check to see if this value falls within the$99 \%$ confidence interval, part e.