Create a Pareto chart for the given expenditure data, showing the percentage of total expenditure for each…

Question

Create a Pareto chart for the given expenditure data, showing the percentage of total expenditure for each item and their cumulative percentages.

ScanSolve AI Tutor · Accepted Answer

To represent the data by a Pareto chart, we first need to sort the expenditure items in descending order, calculate their individual percentages of the total expenditure, and then their cumulative percentages. A Pareto chart is a bar graph that displays categories in descending order of frequency (or expenditure in this case) and also shows the cumulative percentage of the total. Step 1: Sort the items by expenditure in descending order. The total expenditure is given as Rs 2000. Items — Expenditure (in Rs)Food — 800 Clothing — 500 Education — 400 Fuel — 200 Misc. — 100 Total — 2000 Step 2: Calculate the percentage of total expenditure for each item and the cumulative percentage. Items — Expenditure (in Rs) — Percentage of Total Expenditure — Cumulative PercentageFood — 800 — 800/2000 × 100 = 40% — 40%; Clothing — 500 — 500/2000 × 100 = 25% — 40% + 25% = 65%; Education — 400 — 400/2000 × 100 = 20% — 65% + 20% = 85%; Fuel — 200 — 200/2000 × 100 = 10% — 85% + 10% = 95%; Misc. — 100 — 100/2000 × 100 = 5% — 95% + 5% = 100% Total — 2000 — 100% Step 3: Construct the Pareto chart. To represent this data as a Pareto chart: Draw a bar chart with the items on the horizontal axis (x-axis) in the order: Food, Clothing, Education, Fuel, Misc. The height of each bar will represent the expenditure in Rupees, corresponding to the primary vertical axis (left y-axis), which ranges from 0 to 800 Rs. Draw a line graph on the same chart representing the cumulative percentage. This line will correspond to a secondary vertical axis (right y-axis), ranging from 0% to 100%. Plot points for the cumulative percentages at the end of each bar (e.g., 40% above Food, 65% above Clothing, etc.) and connect them with a line. This chart visually highlights that Food, Clothing, and Education account for 85% of the total family expenditure.

Create a Pareto chart for the given expenditure data, showing the percentage of total expenditure for each item and their cumulative percentages.

Answer

Step-by-step solution

Sort the items by expenditure in descending order.

Calculate the percentage of total expenditure for each item and the cumulative percentage.

Construct the Pareto chart.

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More Business/Management Questions

Items	Expenditure (in Rs)	Percentage of Total Expenditure	Cumulative Percentage
Food	800	$\frac{800}{2000} \times 100 = 40\%$	$40\%$
Clothing	500	$\frac{500}{2000} \times 100 = 25\%$	$40\% + 25\% = 65\%$
Education	400	$\frac{400}{2000} \times 100 = 20\%$	$65\% + 20\% = 85\%$
Fuel	200	$\frac{200}{2000} \times 100 = 10\%$	$85\% + 10\% = 95\%$
Misc.	100	$\frac{100}{2000} \times 100 = 5\%$	$95\% + 5\% = 100\%$
Total	2000	100%