STRICTLY CONFIDENTIAL

THE PUBLIC ACCOUNTANTS EXAMINATION

COUNCIL OF MALAWI

2010 EXAMINATIONS

ACCOUNTING TECHNICIAN PROGRAMME

PAPER TC 3: BUSINESS MATHEMATICS &

STATISTICS

(DECEMBER 2010)

TIME ALLOWED: 3 HOURS

SUGGESTED SOLUTIONS
 1

SECTION A

ANSWER ALL QUESTIONS IN THIS SECTION

4 ¼
1. (a) (14.2) + (14.2)
= 40,658.69 + 1.9412
= 40,660.6312

(b) a2 – 2ab + b2
a2 + 2ab + b2

= (a – b)2
(a + b)2
2
= a–b
a+b

= (½)2
= ¼

(c) I =

A =P+I
=P+

For the money to double then A = 2P for T = 20 years






2. (a) Let C = total costs

C = total variable costs + total fixed costs
= 5q + 75

(b) If q = 100
C = (5 x 100) + 75
= K575

(c) If q = 0, c = K75
q = 100, c = K575
Vertical axis : 2cm = 100 units
Horizontal axis : 1cm = 10 units

See graph attached.

 2

(d) From the graph, if q = 75, C = K450.

3. (a) Using the formula for compound interest

A = P(1+r)n

P = 22,000 – 20,000
= K2,000
A = K2,721
n= 4

∴ 2,721 = 2,000(1 + r)4

(1 + r)4 = 2,721
2,000
= 1.3605
1+r =
= 1.08
r = 0.08
= 8%

(b) Let x and y be monthly incomes of the two persons

Then x:y = 2:3

 x = 2
y 3
 3x = 2y

If x and y are monthly incomes and each person saves K5,000 a month
then expenditures are:
x – 5000 and y – 5000
 x – 5000 = 4
y – 5000 7
 7(x – 5000) = 4(y – 5000)
 7x – 4y = 15000

Solving 3x = 2y and 7x – 4y = 15000

Simultaneously:

7x – 2(3x) = 15000
x = 15,000
y = 3 (15000)
2
= 22,500
 3

∴ Their monthly incomes are K15,000 and K22,500 and monthly

expenditures are K10,000 and K17,500 respectively.

OR

(i) Income

or

(ii) Expenditure
Expenditure = income – savings
for
for
but

7x 4y = 15000 (ii)

Solving for x

Substituting


 4

If

Expenditure
Expenditure = income savings
for
= 10,000

For
= 22,500 5000
= 17,500

y 22500

Expx 10,000
Expy 17,500

4. (a)

(b) (i) P(≤1 or >1, ≤ 2 weeks)

= P(≤1 week) + P(>1, ≤2 weeks)
= 0.10 + 0.25
= 0.35

(ii) P(>3, ≤ 6 weeks)

= P(>3, ≤ 4 weeks) + P(>4, ≤ 5 weeks)
= + P(>5, ≤ 6 weeks)
= 0.20 + 0.15 + 0.10
= 0.45
 5

5. (a) Total monthly wages for 300 workers

= 300 x K5,000
= K1,500,000

Total monthly wages for 100 workers

= 100 x K4,500
= K450,000

∴ Average monthly wage of the remaining 200 workers in Firm A

= 1,500,000 – 450,000
200
= 1,050,000
200

= K5,250

(b) CV for Firm A = 100

5000
= 0.2
CV for Firm B = 120
4000

= 0.3

∴ Firm B has greater variability because has a higher coefficient of

variation.

(c) Average wage for all workers taken together

= 1,500,000 + 2,800,000
1000
= K4,300

Standard Deviation of wages for all workers:

∴
 6

6. (a) P=R–C
= (100x - (100 + 23x +
= 100 + 77x – 1.5

Set 77 – 3x = 0
∴ x = 25.7 tonnes

(b) P = 0 means that

100 + 77x – 1.5x 2 = 0
or 3x2 – 154x + 200 = 0

∴ x=

∴ x = 1.3 tonnes or 50 tonnes

(c)

∴
 7

SECTION B
7. (a)
Costs
(K’000) 80_

x
x
x
x
x
60 _ x

x
x
x
x
x

40 _

x
_ x

20_

| | | | |
0 1 2 3 4 5 Age (years)
Vertical axis
Horizontal axis
Scatter points
Comment: From the diagram it can be seen that a straight line relationship
provides a good fit to the data scale.

(b)
 8

n = 12

Using the regression coefficient formula given:

b = 12 × 2,125 – 36 × 636
12 × 130 – 36 × 36

= 2604
264

= 9.8636

a = 636 – 9.8636×36
12 12

= 53 – 29.5908
= 23.4092
thus y = 23.41 + 9.86x

(c) The fixed cost of service and maintenance of the cars is K23,410 with variable
cost of K9,860 per car.

(d) Additional information would include:

- Amount of depreciation year by year

- Replacement cost at various points
- Maintenance costs of cars older than 5 years.

8. (a) (i) Rank correlation coefficient uses ranks of values while product
moment coefficient uses actual values.

(ii) Rank correlation coefficient can be used on non- numeric data while
product moment coefficient is used on numeric data.

(b)
 9

Supplier Manager 1 Manager 2 d d2

A 2 3 -1 1
B 7 6 +1 1
C 6 4 +2 4
D 1 2 -1 1
E 4 5 -1 1
F 3 1 +2 4
G 5 8 -3 9
H 8 7 +1 1____
M1 d2 = 22

R =

= 1–

= +0.74

As the rank correlation coefficient is +0.74 we are able to say that there is a
reasonable agreement between the two managers rankings o f the suppliers.

(c) The term ‘present value’ simply means the amount of money which must be
invested now for n years at an interest rate of r%, to earn given future sum of
money at the time it will be due.

(d)
Discount Success Failure
Factor Cash flow PV Cash flow PV
Year 5% (‘000) (‘000) (‘000) (‘000)
0 1.000 (340.00) (340.00) (340) (340.000)
1 0.952 210 199.92 162 154.224
2 0.907 210 190.47 174 157.818
50.39 (27.958)

NPV = (25% × 50.39) + (75% × -27.958)

= 8.371

The NPV is K8,371 and hence the organisation should not invest in the
project.

9. (a)
 10

1988 1989 1990 1991 1992 1993 1994

Nu mber of Adverts placed
(1990 = 100) 90 96 100 115 128 140 160
Vo lu me of sales (1980 = 100 96 98 100 118 133 145 161

Comment: They show that volume of sales is increasing at a slightly

faster rate, in general, than the number of advertisements placed.

(b) Item Qo Po Q1 P1 Q2 P2
P 2250 2.50 2500 2.00 3200 3.10
Q 12000 12.15 14500 15.00 15200 16.10
R 1250 5.25 1400 5.30 1650 5.55

Laspeyre: Price Paasche: Quantity

QoPo QoP1 Qo P2 Q2 P2 Q1 P1 QoP2 QoP1
5625 4500 6975 9920 5000 6975 4500
145800 180000 193200 244720 217500 193200 180000
6562.5 6625 _ 6937.5__ 9157.5 _ 7420 6937.5 _ 6625__
157987.5 191125 207112.5 263797.5 229920 207112.5 191125

(i) 2008 Index Numbers are as follows:

- A Laspeyre Price Index = 100 x 191125

157987.5
= 120.97

- A Paasche Quantity Index:

= 100 x 229920
191125
= 120.10

(ii) 2009 Index Numbers are as follows:

- A Laspyere Price Index = 100 x 207112.5

157987.5
= 131.09

- A Paasche Quantity Index

= 100 x 263797.5
207112.5

= 127.40
END