CH 7

CHAPTER 7
Business Statistics
Instructor:
Dr.Rehab Alsultan
Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

7-1 Learning Outcomes
■ Interpret and draw:

– A bar graph.
– A line graph.
– A circle graph.

7-1-1 Interpret and draw a bar graph
Section 7-1 Graphs and Charts
■ Write an appropriate title.

■ Make appropriate labels for bars and scale.
■ The intervals should be equally spaced
and include the smallest and largest values.
■ Draw horizontal or vertical bars to represent
the data.
– Bars should be of uniform width.
■ Make additional notes as appropriate, to aid
interpretation.

7-1-1 Interpret and draw a bar graph
Corky's Barbecue Business
June
May
April
March
February
January
0 10000 20000 30000 40000 50000 60000 70000

7-1-2 Interpret and draw a line graph

■ Make and label appropriate horizontal and vertical
scales, each with equally spaced intervals.
– Often, the horizontal scale represents time.
■ Use points to locate data on the graph.
■ Connect data points with line segments
or a smooth curve.

7-1-2 Interpret and draw a line graph
Neighborhood Grocery Daily

2500
2000
1500
Sales
1000
500
0
Monday Tuesday Wednesday Thursday Friday Saturday

7-1-3 Interpret and draw a circle graph

■ Find the sum of values in the data set.
■ Represent each value as a fraction or decimal
part of the sum of values.
■ For each fraction, find the number of degrees
in the sector of the circle to be represented
by the fraction or decimal.
– (100% = 360°).
■ Label each sector of the circle as appropriate.

7-1-3 Interpret and draw a circle graph
Family Take-Home Pay
Food, 400 Housing, 400
Insurance, 80
Contributions, 160
Education, 80
Personal, 80
Savings, 160
Miscellaneous, 80
Clothing , 160

■ Find the mean, median & mode.

■ Make and interpret a frequency distribution.
■ Find the mean of grouped data.

Key Terms…
Section 7-2 Measures of Central Tendency
■ Mean
– The arithmetic average of a set of data or sum of
the values divided by the number of values.
■ Median
– The middle value of a data set when the values
are arranged in order of size.
■ Mode
– The value or values that occur most frequently in
a data set.

7-2-1 Find the mean
■ A common statistic we may calculate for a data

set is its mean.
– The statistical term for the ordinary arithmetic
average.
■ To find the mean, or arithmetic average, divide
the sum of the values by the total number of
values.

7-2-1 Find the mean
Find the sum of the values.

Divide the sum by the
total number of values.
sum of values
Mean =
number of values

Data Sets
■ A business records its daily sales, and these

values are an example of a data set.
■ Data sets can be used to:
– Observe patterns
– Interpret information
– Make predictions about future activity

Key Terms…
■ Data set
– A collection of values or measurements that have
a common characteristic.
■ Statistic
– A standardized, meaningful measure of a set of
data that reveals a certain feature or characteristic
of the data.

An Example…
Sales figures for the last week for the

Western Region have been as follows:
Monday $4,200
Tuesday $3,980
Wednesday $2,400
Thursday $3,100
Friday $4,600
What is the average daily sales figure?
(4,200 + 3,980 + 2,400 + 3,100 + 4,600) ÷ 5 = $3,656

Examples…
■ Mileage for the new salesperson has been 243,

567, 766, 422 and 352 this week. What is
the average number of miles traveled?
– 470 miles daily
■ Prices from different suppliers of 500 sheets of

copier paper are as follows: $3.99, $4.75,
$3.75 and $4.25. What is the
average price?
– $4.19

7-2-1 Find the median
■ A second kind of average is a statistic called

the median.
■ To find the median of a data set, order the values
from smallest to largest, or largest to smallest and
select the value in the middle.
– If the number of values is odd, it will be exactly
in the middle.
– If the number of values is even, identify the two
middle values, add them together and divide by two.

An Example…
A recent survey of the used car market for the

particular model John was looking for yielded
several different prices: $9,400, $11,200,
$5,900,
$10,000, $4,700, $8,900, $7,800 and $9,200.
Find the median price.
Arrange from highest to lowest:
$11,200, $10,000, $9,400, $9,200, $8,900, $7,800, $5,900,
$4,700
Calculate the average of the two middle values:

(9,200 + 8,900) ÷ 2 = $9,050 or the median price
An Example…
■ Five local moving companies quoted the following

prices to Bob’s Best Company: $4,900,
$3800,
$2,700, $4,400 and $3,300. Find the
median price.
– $3,800

7-2-3 Find the mode
■ Find the mode in a data set by counting the

number of times each value occurs.
– Identify the value or values that occurring
frequently.
■ There may be more than one mode if the same
value occurs the same number of times as
another value.
– If no one value appears more than once, there
is no mode.

An Example…
Results of a placement test in mathematics

included the following scores:
65, 80, 90, 85, 95, 85, 80, 70 and 80.
Which score occurred the most

frequently?
80 is the mode. It appeared three times.

An Example…
A university recruiter is evaluating the number

of community service hours performed by ten
students who are applying for a job on campus.
Observe the mean, median and
mode from this data set.
Determine which one or ones might help
the recruiter the most in making a realistic
assessment of the number of service
hours performed last semester.

An Example…
Find the mean, median and mode in this example.

Name Hours
Jack: 10 The mean is 8.4.
Michelle: 14 The median is 7.5.
Bill: 5
Jackie: 2 The mode is 2.
Jason: 20 Of the three values, which one
Larissa: 12 or one(s) would help you make
Tony: 2
a realistic assessment of the
Melanie: 18
number of service hours?
Art: 1
Sheila: 0 Why?

7-2-4 Make and interpret a frequency distribution
■ Identify appropriate intervals for the data.

■ Tally the data for the intervals.
■ Count the number in each interval.

Key Terms…
■ Class intervals
– Special categories for grouping the values in
a data set.
■ Tally
– A mark used to count data in class intervals.
■ Class frequency
– The number of tallies or values in a class
interval.
■ Grouped frequency distribution
– A compilation of class intervals, tallies, and class
frequencies of a data set.
An Example…
Test scores on the last math test were as follows:

78 84 95 88 99 92 87 94
90 77
Make a relative frequency distribution
using intervals of:
Class Class Relative
Interval
75-79, 80-84, 85-89, 90-94,Frequency
Frequency
and 95-99.
Calculations
75-79 2 2/10 20%
80-84 1 1/10 10%
85-89 2 2/10 20%
90-94 3 3/10 30%
95-99 2 2/10 20%
Total 10 10/10 100%

7-2-4 Find the mean of grouped data
■ Make a frequency distribution.

■ Find the products of the midpoint of the interval.
– Find the sum of the products.
■ Find the frequency for each interval, for all
intervals.
– Find the sum of the frequencies.
■ Divide the sum of the products by the sum
of the frequencies.

An Example…
Test scores on the last math test were as follows:

78 84 95 88 99 92 87 94
90 77
Make a relative frequency distribution
using intervals of:
Class Class Product
Interval 75-79, 80-84,
Frequency 85-89,
Midpoint 90-94,
MP &and
Freq.95-99.
75-79 2 77 154
80-84 1 82 82
85-89 2 87 174
90-94 3 92 276
95-99 2 97 194
Total 10 880
Mean of the grouped data: 880 ÷ 10 =
88
■ Find the range.

■ Find the standard deviation.

7-3-1 Measures of dispersion
Section 7-3 Measures of Dispersion
■ Another group of statistical measures is

measures of variation or dispersion.
■ The variation or dispersion of a set of data
may also be referred to as the spread.

Key Terms…
■ Measures of central tendency

– Statistical measurements such as the mean,
median or mode that indicate how data groups
toward the center.
■ Measures of variation or dispersion
– Statistical measurement such as the range and
standard deviation that indicate how data is
dispersed or spread.

Key Terms…
■ Range
– The difference between the highest and lowest values
in a data set (also called the spread).
■ Deviation from the mean
– The difference between a value of a data set and the
mean.
■ Standard variation
– A statistical measurement that shows how data
is spread above and below the mean.

Key Terms…
■ Variance
– A statistical measurement that is the average of the
squared deviations of data from the mean.
The square root of the variance is the standard
deviation.
■ Square root
– The factor that was multiplied by itself to result in
the number. The square root of 81 is 9. (9 x 9 = 81).
■ Normal distribution
– A characteristic of many data sets that shows
that data graphs into a bell-shaped curve around
the mean. Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›
Deviation
■ The deviation from the mean of a data value is

the difference between the value and the mean.
– A clearer picture is given by examining how much
each data point differs or deviates from the mean.
Find the mean of a set of data.

Find the amount that each data value
deviates or is different from the mean.
Deviation from the mean = data value – mean

Deviation
■ When the value is smaller than the mean, the

difference is represented by a negative number.
– Indicating it is below or less than the mean.
■ If the value is greater than the mean, the
difference is represented by a positive number.
– Indicating it is above or greater than the mean.

An Example…
Find the highest and lowest values.

Find the difference between the two.
The grades on the last exam were

78, 99, 87, 84, 60, 77, 80, 88, 92, and 94.
The highest value is

99. The lowest value is
60.
The difference, or
the range is 39.
An Example…
What can you learn by analyzing the sum of the deviations?
Data set: 38, 43, 45, 44

Mean = 42.5
1st value: 38 – 42.5 = -4.5 below the mean
2nd value: 43 – 42.5 = 0.5 above the mean
3rd value: 45 – 42.5 = 2.5 above the mean
4th value: 44 – 42.5 = 1.5 above the mean

An Example…
What can you learn by analyzing the sum of the deviations?
Data set: 38, 43, 45, 44

Mean = 42.5
1st value: 38 – 42.5 = -4.5 below the mean
One value is below the mean and its deviation is -4.5.
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HOW TO: Find the standard deviation of a set of data
■ A statistical measure called the standard

deviation uses the square of each deviation
from the mean.
– The square of a negative value is always
positive.
■ The squared deviations are averaged
(mean).
– The result is called the variance.

STEP 1
Find the mean.
STEP 2
Find the deviation of each value from the mean.
STEP 3
Square each deviation.
STEP 4
Find the sum of the squared deviations.

STEP 5
Divide the sum of the squared deviations by one
less than the number of values in the data set.
This amount is called the variance.
STEP 6
Find the standard deviation by taking the square
root of the variance.

An Example…
Find the standard deviation for the following data set:

18 22 29 27
Deviation
Value Mean Squares of
from Mean
Deviation
18 24 18 – 24 = -6 -6 x -6 = 36
22 24 22 – 24 = -2 -2 x -2 = 4
29 24 29 – 24 = 5 5 x 5 = 25
27 24 27 – 24 = 3 3x 3= 9
Sum of Squared Deviations 74

An Example…
Find the standard deviation for the following data set:

18 22 29 27
Deviation Squares of
Value Mean from Mean Deviation
18 18 – 24 = - -6 x -6 = 36
24
22 24 6 4
2 2 –
sum o f sq u a r e d2 4 = - 2
29Variance24= - 2 x - n2 29
= – 24 = 5 5
27 24 devi a 27 t–io
24 n= s3 3x 3= 9
x 5 = 25 1
74
VarianceS=um74o÷f
Standard deviation = square root of the variance
3Sq=u2a4r.e6d66D6e6v7iations
Standard deviation = 4.97 rounded
Exercises Set
A

EXERCISE SET A
Find the range, mean, median, and mode for the

following. Round to the nearest hundredth if
necessary.
2. Sandwiches
$0.95 $1.65 $1.27 $1.97
$1.65 $1.15
Range = $1.97  $0.95 = $1.02
$0.95  $1.27  $1.65  $1.65  $1.97 

Mean =
$1.15
6
EXERCISE SET A
Find the range, mean, median, and mode for the

following. Round to the nearest hundredth if
necessary.
2. Sandwiches
$0.95 $1.65 $1.27 $1.97
$1.65 $1.15
Arrange in order: $0.95, $1.15, $1.27, $1.65, $1.65,

$1.97
$1.27  $1.65
Median = 2  $1.46
Mode = $1.65
EXERCISE SET A
4. During the past year, Piazza’s Clothiers sold a

certain sweater at different prices: $42.95, $36.50,
$40.75, $38.25, and $43.25. Find the range,
mean, median, and mode of the selling prices.
Write a statement about the data set based on
your findings.
Range = $43.25  $36.50 = $6.75
$42.95  $36.50  $40.75  $38.25 

Mean =
$43.25
$201.70
 5  $40.34 5
EXERCISE SET A

your findings.
Arrange in order: $36.50, $38.25, $40.75,
$42.95,
$43.25
Median = $40.75
There is no mode.

EXERCISE SET A

your findings.
Statements about the data set may vary. The mean

and median are very similar and there is no mode.
The data clusters near the mean.

EXERCISE SET A
6. Which period had the highest average enrollment?
Period 5 (10:40 – 11:30) with an average of 801.

EXERCISE SET A
8. Draw a bar graph representing

the mean enrollment for each
period.
900
800
700
600
Mean Enrollment
500
400
300
200
100
0
1 2 3 4 5 6 7 8 9 10
Period

EXERCISE SET A
Sales for the Family Store, 2010-2011

2010 2011
Girls’ clothing $74,675 $81,534
Boys’ clothing 65,153 68,324
Women’s clothing 125,115 137,340
Men’s clothing 83,895 96,315
10. What is the least value for 2010 sales? For 2011
sales?
2010: $65,153; 2011: $68,324

EXERCISE SET A
Sales for the Family Store, 2010-2011

2010
12.Using the values in the 2011

table, which of the following Girls’ clothing $74,675 $81,534
Boys’ clothing 65,153 68,324
interval sizes would be more
Women’s clothing 125,115 137,340
appropriate in making a bar Men’s clothing 83,895 96,315
graph? Why?
a. $1,000 intervals
($60,000, $61,000,
$62,000, . . .)
b. $10,000 intervals
($60,000, $70,000,
$80,000, . . .)Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›
EXERCISE SET A
14. What three-month period maintained a fairly

constant sales record?
May–July

EXERCISE SET A
16. What percent of the gross

pay goes into savings?
(Round to tenths.)
$60
$700 (100%) 
8.6%
18. What percent of the gross
pay is the take-home pay?
(Round to tenths.)
$394
$700(100%)  56.3%
EXERCISE SET A
20. Find the range for the data set:

90, 89, 82, 87, 93, 92, 98, 79, 81, 80.
98  79 = 19

EXERCISE SET A
22. Find the variance for the scores in the following

data set: 90, 89, 82, 87, 93, 92, 98, 79, 81, 80.
Show that the sum of the deviations is zero.

EXERCISE SET A
22. Find the variance for the scores in the following

data set: 90, 89, 82, 87, 93, 92, 98, 79, 81, 80.
Show that the sum of the deviations is zero.
368.90 368.90
Variance =   40.98888888
10  1 9
Sum of deviations = (-8.1) + (-7.1) + (-6.1) + (-5.1) +
(-0.1) + 1.9 + 2.9 + 4.9 + 5.9 + 10.9 = 0

EXERCISE SET A
24. Use the test scores of 24 students taking

Marketing 235 to complete the frequency
distribution and find the grouped mean rounded
to the nearest whole number:
57 91 76 89 82 59 72 88
76 84 67 59 77 66 56 76
77 84 85 79 69 88 75 58

EXERCISE SET A
24.

EXERCISE SET A
24. 1797
Mean of grouped data =  74.875
24
The grouped mean of the scores is 75 (rounded

to the nearest whole number).

Practice Test

PRACTICE TEST
The costs of producing a piece of luggage at

ACME Luggage Company are labor, $45;
materials, $40; overhead, $35.
2. What is the total cost of producing a piece

of luggage?
$45 + $40 + $35 = $120
4. What percent of the total cost is attributed

to materials?
$40
(100%) 
$120 33.3%
PRACTICE TEST
The costs of producing a piece of luggage at

ACME Luggage Company are labor, $45;
materials, $40; overhead, $35.
6. Compute the number of degrees for labor,

materials, and overhead needed for a circle graph.
Round to whole degrees.
labor: 360(0.375) = 135 degrees
materials: 360(0.333) = 120 degrees
overhead: 360(0.292) = 105 degrees

PRACTICE TEST
8. What is the greatest value of fresh flowers? Of silk

flowers?
fresh flowers: $23,712; silk flowers: $17,892

PRACTICE TEST
10. What interval size would be most appropriate

when making a bar graph? Why?
a. $100 b. $1,000 c. $5,000 d.
$10,000
c. $5,000; other interval sizes would provide too

many or too few intervals.
PRACTICE TEST
11. Construct a bar graph.

25000
20000
Thousand Dollars
15000
Fresh
10000 Silk
5000
0
January February March April May June
Month

PRACTICE TEST
The totals of the number of laser printers sold in the

years 2006 through 2011 by Smart Brothers
Computer Store are as follows:
2006 2007 2008 2009 2010 2011
983 1,052 1,117 615 250 400
12. What is the smallest value? The greatest value?
smallest: 250; greatest: 1,117

PRACTICE TEST
14. Find the mean, variation, and standard deviation

for the set of average prices for NFL tickets.
Year 2004 2005 2006 2007 2008 2009
Avg $54.75 $59.05 $62.38 $67.11 $72.20 $74.99
Ticket
Price
Mean:
54.75  59.05  62.38  67.11 72.20  74.99
6
390.48
6  $65.08

PRACTICE TEST
Year 2004 2005 2006 2007 2008 2009

Avg Ticket Price
$54.75 $59.05 $62.38 $67.11 $72.20 $74.99
Variation
Score Mean Deviation (Deviation)2
$54.75 65.08 -10.33 106.7089
$59.05 -6.03 36.3609
$62.38 -2.7 7.29
$67.11 2.03 4.1209
$72.20 7.12 50.6944
$74.99 9.91 98.2081
Sum of deviation2 = 106.7089 + 36.3609 + 7.29
+ 4.1209 + 50.6944 +
98.2081
= 303.3832
PRACTICE TEST
Year 2004 2005 2006 2007 2008 2009

Avg Ticket Price
$54.75 $59.05 $62.38 $67.11 $72.20 $74.99
303.3832 303.3832
Variance =   60.67664
61 5
S.D. = 303.3832 60.67664

5 
 7.789521166 or 7.79

CH 7

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CHAPTER 7

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Interpret and draw:

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Write an appropriate title.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Corky's Barbecue Business

0 10000 20000 30000 40000 50000 60000 70000

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Write an appropriate title.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Neighborhood Grocery Daily

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Write an appropriate title.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Family Take-Home Pay

Food, 400 Housing, 400

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Find the mean, median & mode.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ A common statistic we may calculate for a data

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Find the sum of the values.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ A business records its daily sales, and these

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Sales figures for the last week for the

What is the average daily sales figure?

(4,200 + 3,980 + 2,400 + 3,100 + 4,600) ÷ 5 = $3,656

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Mileage for the new salesperson has been 243,

■ Prices from different suppliers of 500 sheets of

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ A second kind of average is a statistic called

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

A recent survey of the used car market for the

Calculate the average of the two middle values:

■ Five local moving companies quoted the following

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Find the mode in a data set by counting the

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Results of a placement test in mathematics

65, 80, 90, 85, 95, 85, 80, 70 and 80.

Which score occurred the most

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

A university recruiter is evaluating the number

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Find the mean, median and mode in this example.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Identify appropriate intervals for the data.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Test scores on the last math test were as follows:

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Make a frequency distribution.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

Test scores on the last math test were as follows:

■ Find the range.

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Another group of statistical measures is

Copyright © 2014, 2010, 2007 Pearson Education, Inc. ‹#›

■ Measures of central tendency