Question

20. Two employees of a company have to file expense reports for their travel. The first had taken 7 trips with a mean trip cost of $750. The second took a total of 5 trips with a mean cost of $1200. The accounting department wants to determine the mean cost of all the trips that these two employees took. What is the mean cost of all 12 trips? Proposed Solution: Since we have two costs (one for each employee) we can find the mean cost of both employees by the following computation: (750 + 1200) / 2 = 975 What was done wrong in the proposed solution?

Answer 1

Answer:

What is the mean cost of all 12 trips?

$937.50 per trip

What was done wrong in the proposed solution?

In order for this solution to be correct, both employees should have taken the same number of trips since the weight per trip is equal for both of them. But in reality, the first employee took 2 more trips than the second employee, therefore, the weight of the first employee's trips should be higher. E.g. if both employees had taken 6 trips each, then the average cost per trip would have been $975.

Step-by-step explanation:

the mean cost of all 12 trips = [(7 x $750) + (5 x $1,200)] / (7 + 5) = ($5,250 + $6,000) / 12 = $11,250 / 12 = $937.50