Question

The weekly amount spent for maintenance and repairs in a certain company has an approximately normal distribution with a mean of $600 and a standard deviation of $40. If $700 is budgeted to cover repairs for next week, what is the probability that the actual costs will exceed the budgeted amount?

Answer 1

Answer: Our required probability is 0.0062.

Step-by-step explanation:

Since we have given that

Mean = $600

Standard deviation = $40

$\bar{X}=\ 700$

First we will find the test statistic value:

$z=\dfrac{\bar{X}-\mu}{\sigma}\\\\z=\dfrac{700-600}{40}\\\\z=\dfrac{100}{40}\\\\z=2.5$

By using the Standard normal table,

So, the probability that the actual costs will exceed the budgeted amount is given by

$P(Z>2.5)=0.0062$

Hence, our required probability is 0.0062.