THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
Sales at a local wholesaler consist of both retail as well as online sales.During the course of a month,retail sales have a mean of $96,780 with a standard deviation of $12,520.Over the same time period,online sales average $229,620 with a standard deviation of $23,100.Assume that the retail sales are independent of online sales.
-A car owner determines that annual repair costs (R)can be estimated based on the number of miles driven in one year (M)through the expression R = 800 + 0.05M.If the average number of miles driven is 12000 with a standard deviation of 2500 miles,what is the standard deviation of the expected annual repair costs?
A)1400
B)925
C)800
D)125

Question

Quizplus · Accepted Answer

The standard deviation of the expected annual repair costs can be found by multiplying the standard deviation of the number of miles driven (2500 miles) by the coefficient of M in the expression for R (0.05). This gives 2500 * 0.05 = 125.