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Small business owners often look to payroll service companies to handle their employee payroll. Reasons are that small business owners face complicated tax regulations and penalties for employment tax errors that are costly. According to the Internal Revenue Service, 26% of all small business employment tax returns contained errors that resulted in a tax penalty to the owner (The Wall Street Journal, January 30, 2006). The tax penalty for a sample of 20 business owners follows:
820 270 450 1010 890 700 1350 350 300 1200
390 730 2040 230 640 350 420 270 370 620
a. What is the mean tax penalty for improperly filled employment tax returns?
b. What is the standard deviation?
c. Is the highest penalty, $2040, an outliner?
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