Business Statistics: Module 5.

T-Test Page 1 of 7

Module 5. Fundamentals of Hypothesis Testing Tools (T-test one sample test;

one-tail and two-tail tests)

T-Test one sample test – is used if population standard deviation (δ) is NOT
known

 Similar to z-test, t-test is a parametric tool which is a test of difference; and its
procedures are the same.

T = (xbar - ɥ) ɥ = population mean xbar = sample mean

s s = sample standard deviation n = number of samples
n

 Aside from level of significance, t-test requires a degree of freedom in order to

determine the t-test critical value from the t-test distribution table which is appended
in this module after the references section

Degree of freedom (df) = n – 1 where n = number of samples

Problems illustration

1. The dean of business and accountancy of a certain local college knows that its vital
for accountancy students to have strong foundations in accounting courses to
increase the probability of their students passing the CPA licensure examination.
Based on records, their students mean grade is accounting courses is 87.89 which
is satisfactory. However, the dean wants the students to improve their academic
performance in the professional course. So the dean and accounting instructors
implemented various teaching strategies to encourage students to persevere on
their studies. To find out if their strategies were effective, the dean conducted a
survey among randomly select 100 accounting students and the result showed a
mean grade of 90.15 with standard deviation of 2.75. At a .05 level of significance,
is the average grade of accounting students in their accounting subjects higher than
87.89?

The focus of the problem academic performance or grades of students in their

accounting courses. The dean wants to know if the students’ grades have changed
for the better. The population mean is 87.89 based on historical records. The
sample mean and sample standard deviation are 90.15 and 2.75 respectively; and
these data were from the sample of 100 respectively,

As previously mentioned, your guide in writing your hypothesis is the given question
in the problem, which is your alternative hypothesis; and you need to state it in
declarative form. The population mean will always appear in the hypothesis – be it
null or alternative hypothesis.
Business Statistics: Module 5. T-Test Page 2 of 7

Null hypothesis: The average grade of accounting students in their accounting

courses is less than or equal to 87.89.
Alternative hypothesis: The average grade of accounting students in their
accounting courses is higher than 87.89.

Note that alternative hypothesis shows an upper tail direction based on the term
“higher than.” For a one-tail hypothesis, no need to divide the level of significance by
2; take the given level of significance as it is.

Level of significance: .05

Before you can determine the t-test critical value, you need to know the degree of
freedom. The number of sample is 100 and subtract 1 from it.

Degree of freedom = n – 1 = 100 – 1 = 99

Next, determine the t-test critical @ .05 level of significance (column headings) and
degree of freedom of 99 (row headings) from the t-test distribution table after the
references section. The value where the two factors intercept will the critical value.

t-test critical = +1.660 the critical value is positive, upper tail (higher)

Draw the normal curve and plot the critical t-values on the curve. Since it’s an upper
one tail hypothesis, only shade the upper tail of the curve.

Normal curve
1.660

Write your decision rule.

Decision rule: Reject null hypothesis if T > +1.660; otherwise, do not reject the
null hypothesis

Calculate the t-test value

T = (xbar - ɥ) = (90.15– 87.89) = 8.218

s 2.75 _
n 100

Next, state your conclusions; and give your recommendations.

Conclusion: Reject the null hypothesis, 8.218 > 1.660; which means there is enough
evidence to support that the students’ average grade in accounting courses is higher
than 87.89.
Business Statistics: Module 5. T-Test Page 3 of 7

Recommendation: The various teaching strategies which the dean and accounting
instructors implemented are effective in encouraging students to further their
students to attain higher grades. Thus, they can continuously implement those
strategies; and to consistently look for more interesting and better strategies which
will motivate students to constantly strive their best efforts in their studies. (You can
give more recommendations aside from the given example.)

2. According to the manager of the CLOY milk tea shop, the standard waiting for the
customers to receive their orders is 11.5 minutes. In the past few months, the
manager introduced a new process to reduce customer waiting time. After some
time, he observed randomly select 50 customers and recorded a mean customer
waiting time of 10.5 minutes with standard deviation of 1.5 minutes. Was the
manager successful in reducing customer waiting time with the new process? At a
.05 level of significance, is the mean customer waiting time different from 11.5
minutes:

Null hypothesis: The average customer waiting time is equal to 11.5 minutes
Alternative hypothesis: The average customer waiting time is different from 11.5
minutes.

Level of significance: .05/2 = .025 divide alpha by 2 since its two-tail hypothesis,

Degree of freedom = n – 1 = 50 – 1 = 49

Critical value: +2.010 two-tail hypothesis, positive-negative critical value (+2.010)

Normal curve
-2.010 2.010

Decision rule: Reject the null hypothesis if t < -2.010 or t > 2.010; otherwise, do
not reject the null hypothesis.

Computation: T = (xbar - ɥ) = (10.5 – 11.5) = - 4.714

s 1.5 _
n 50

Conclusion: reject the null hypothesis, -4.714 < -2.010; which means that average
customer waiting time is different from 11.5 minutes.

Recommendation: the new process has in effect reduced the average customer
waiting time from 11.5 minutes to 10.5 minutes. This change is beneficial to the
customers since they do not have to wait longer to receive their orders and enjoy
their foods. Thus, the manager needs to make sure that the shop staff consistently
apply the new process in serving the customers. Also, he needs to regularly monitor
the service in the shop and find better ways to further improve it. (You can give more
recommendations aside from the given example.)
Business Statistics: Module 5. T-Test Page 4 of 7

End of Module Exercises

Read and analyze the problems carefully. Work on the problem and follow the step by
step procedure in solving it – from the null hypothesis to the recommendation.

1. The manufacturer of potato fry machine promoted that its machine can fry 200
pounds of potato fries per hour. Fast food restaurants want to test if the
manufacturer’s claim is true before they buy it. The company administered
experiments on the machine for 40 various one-hour period in several food stalls
which sell potato fries which resulted to an average outputs of 195 pounds of potato
fries per hour with standard deviation of 24.5 pounds. At a .01 level of significance,
is the machine’s average potato fries produced different from 200 pounds?

2. The average grade of grade 7 students in English course was recorded at 89. An
English teacher wanted to know if this has changed. Thirty (30) grade 7 students
who were randomly selected showed an average grade of 80 in English course with
standard deviation of 2.25. Is there improvement on their English course grades? At
a .05 level of significance, is the average grade of grade 7 students in English
course better than 89?

3. According to an article published in Z Magazine in 2018, shoppers would spend an

average of 25 minutes in supermarkets. Is this claim still valid? A researcher
surveyed 50 shoppers in one supermarket and resulted to a mean shopping time of
27.25 minutes with standard deviation of 5.5 minutes. At a .01 level of significance,
is the mean shopping time of shoppers in supermarkets different from 25 minutes?

4. The manager of a paint supply store would want to know if the content of a 1 gallon
can of paint bought from a known paint producer is actually 1 gallon. As such, he
randomly sampled 60 cans of paint and it yielded an average of 0.998 gallon with
standard deviation of .04 gallon. At a .01 level of significance, is the average content
of a one gallon can of paint is less than 1 gallon?

5. The production process in a steel bar manufacturing firm, if working properly,

produces steel bars with a mean length of at least 3 feet. A test on randomly select
50 steel bars showed a mean length of 2.95 fee with standard deviation of .35 foot.
At a .05 level of significance, is the mean length of the steel bars shorter than 3 feet?

References

Albright, S. et al. (2015). Business analytics: data analysis and decision making (5th
ed). Cengage Learning.
Anderson, D., Sweeney, D.J., et.al., (2018). Modern business statistics. Australia:
Cengage Learning.
Antivola, H. (2015). Business statistics: a modular approach. Books Atbp. Publishing.
Business Statistics: Module 5. T-Test Page 5 of 7

Anywhere Math. (2016). Introduction to Statistics.

https://www.youtube.com/watch?v=LMSyiAJm99g.
Berenson, M.L., Levine, D.M., & Krehbiel, T.C. (2015). Basic business statistics:
concepts and applications. Pearson Education Sou7th Asia Pte. Ltd.
Bowerman, B. (2017). Business statistics in practice: using modeling, data, and
analytics (8th ed.). McGraw-Hill Education.
Jaggia, S. (2019). Business statistics: communicating with numbers (3rd ed.). McGraw-
Hill Education.
Lee, N. (2016). Business statistics: using excel & SPSS. Sage.
Simple Learning Pro. (2015). Mean, median, mode, range, and standard deviation.
https://www.youtube.com/watch?v=mk8tOD0t8M0.
Sharpe, N. (2015). Business statistics 3rd ed. Pearson Education.
Willoughby, D. (2015). An essential guide to business statistics. John Wiley & Sons.
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