STRICTLY CONFIDENTIAL

2015 EXAMINATIONS

ACCOUNTING TECHNICIAN PROGRAMME

PAPER TC3: BUSINESS MATHEMATICS & STATISTICS

WEDNESDAY 3 JUNE 2015 TIME ALLOWED : 3 HOURS

SUGGESTED SOLUTIONS
 1

 3 2  1  4  3 2   3
2 2
1. (a)  3=  3,
5  82  3  32  3
 32
= 3,
3
=  3 3  0,

(b) Given that A  20 , B  6 , C  4 and D  5 ,

2 A B  410  C  2  20  6  4  10  4
then M  = ,
3B  4C  2 D 3 6  4  4  2  5
40  2  6
= ,
18  16  10
480
=  40
12

2. (a) Frequency distribution,

No. of unprocessed Tally marks Frequency (f)
invoices (x)
0 ||| 3
1 |||| 5
2 |||| 4
3 |||| ||| 8
4 ||| 3
5 || 2
6 | 1
Total 26

(b) Mean number and standard deviation of invoices left unprocessed:

x f f x f x2
0 3 0 0
1 5 5 5
2 4 8 16
3 8 24 72
4 3 12 48
5 2 10 50
6 1 6 36
26 65 227
 2

Hence,
(i) Mean number of invoices left unprocessed is

 f x  65  2.5 invoices
 f 26
(ii) Standard deviation of invoices left unprocessed is

f x  f x
2 2 2
  227  65 
 =   ,
f  f 
  26  26 
= 1.58 invoices

3. (a) C x   5x 2  30 x  100

(i) The cost ofproducing 8 shirts is:

C 8  5  8 2  30  8  100 = 320 – 240 +100 = 180
= K18,000
(ii) Minimum cost: Completing the square,
 
C x   5x 2  30 x  100  5 x 2  6 x  20 ,

= x  3  3  20 ,
2 2

Minimum occurs when x  3  0 i.e. when x  3 i.e. 3 shirts.
Alternatively,

C  x   10 x  30
Minimum occurs when C  x   0
i.e. 10 x  30  0
10 x  30
x  3 i.e. 3 shirts.

(b) (i) P(person will not select a category D vehicle pamphlet)

= 1 – P(person selects Category D vehicle pamphlet),
30 470
= 1   0.94 ,
500 500

(ii) P(Category B vehicle or a Category C vehicle pamphlet is selected)

= P(B or C)
= P B   P C   P B  C  ,
= P B   P C  since B and C are mutually exclusive
265 150 415
=  =  0.83 .
500 500 500
 3

4. (a) (i) Depreciation is the loss of value of an item of an asset over a period of
time as it is being used. For example, the value of a car will go down as it
is being used.

Or

Alternatively, depreciation is an allowance made in

estimates, valuations or balance sheets, normally for wear and tear.

(ii) Here present value is P = K500,000, r  0.06 and future value is K150,000.

Need n such that 500000  1  0.06n  150000

i.e. 0.94n 
150000
500000
or 0.94n 
3
10
Taking logs: log 0.94  log
n 3
10
3
n log 0.94  log ,
10
log 0.3
or n   19.46
log 0.94
i.e. it will take approximately 19.5 years

(b) 12 x  4 y  60
4 x  8 y  40

12 4 60  12 4
The augmented matrix is   and
  12  8  4  4  96  16  80 ,
 4 8 40  4 8

60 4
40 8 60  8  40  4 480  160 320
Then x  =    4,
12 4 80 80 80
4 8
12 60
4 40 12  40  4  60 480  240 240
y =    3,
12 4 80 80 80
4 8
 4

5. (a) Continuous data are data that can take any value within a range while discrete
data are data that can only take certain fixed and finite values.

(b) (i) Calculation of percentages:

Item Amount Percentage

Food 55000 35
Utilities 15000 10
Transport 25000 16
School fees 40000 26
Entertainment 20000 13
Sum 155000 100

Simple percentage bar chart

40
Percentage

35

30

25

20

15

10

0
Food Utilities Transport School fees Entertainment
Budget Item

M1 (Labelled axes), (Correct bars)

(ii) VAT on non- food items = 16.5% of (K155,000 – K55,000),

16.5
=  K100,000  K16,500 ,
100
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6. (a) Let x be the number of tables the carpenter makes.

(i) Then his cost = 750 x  4,000  2,500  18,500 = 750 x  25,000 ,
Revenue (sales) = 1,950 x
Then profit is = 1,950 x - 750 x  25,000 = 1200 x  25,000 ,

(ii) To make a profit of K11,000, we need

1200 x  25000  11000 ,

1200 x  11000  25000 ,
1200 x  36000
36000
x  30
1200
i.e. he needs to make 30 tables to make a profit of K11,000

(b) Profit index numbers using 2011 as base year

Year 2009 2010 2011 2012 2013

Profit 12 15.1 18.5 19.8 16.2
(K  100  64.9  100  81.6  100  100  100  107  100  87.6
18.5 18.5 18.5 18.5 18.5
million

SECTION B (40 Marks)

7. (a) (i) Systematic sampling is a quasi-random sampling technique ideal for

populations that are clearly structured and involves taking the first item
randomly and subsequently picking every other k-th item. On the other
hand, judgmental sampling is a non-random sampling in which the
researcher uses his/her knowledge, experience and judgment as to which
items to include in the sample.

(ii) Advantages:

(1) Systematic sampling: easy to conduct for certain types of

population.

(2) Judgmental sampling: experience can be used to ensure a good

sample selection.

Disadvantages:

(1) Systematic sampling: it cannot apply to all types of population.

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(2) Judgmental sampling: the method is not random and can lead to
bias.

(b) (i) The correlation coefficient is

n  xy   x  y 
r
n  x  
,
  x  n  y   y 
2 2 2 2

12  61500  240  2920

= ,
12  5110  240 12  745200  2920 
2 2

37,200
=  0.95 ,
3,720  416,000

Comment: A correlation coefficient of 0.95 indicates a very strong

positive linear relationship between costs and level of output. So costs rise
as output rises.

(ii) Simple linear regression model y  a  bx ,

n  xy   x  y  12  61500  240  2920
where b  = = 10,
n  x   x  12  5110  240 2
2 2

and a 
 y bx 2920
 10 
=
240
= 43.33,
n n 12 12
Hence simple regression model is y  43.33  10 x ,

(iii) When 15 items are produced, the cost is

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8. (a) (i) Any two components that make up a time series:

I. Trend: the trend in a time series is the general, overall movement of the
series or variable series, with any sharp fluctuations largely smoothed out.

II. Seasonal variation: the seasonal component accounts for the regular
variations that certain variables show at various times of the year or
influenced by seasons.

(Others: cyclic variation, irregular or random variation)

(ii) I. Scatter diagram

70
Sales (K'000)

60

50

40

30

20

10

0
Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr
1 2 3 4 1 2 3 4 1 2 3 4
2012 2013 2014
Year
 8

II. Moving averages trend values

Moving Moving Centred MA
Year Quarter Sales total average (trend values)
1 42
2 41
2011 174 43.5
3 52 43.875
177 44.25
4 39 45.125
184 46
1 45 47.125
193 48.25
2 48 49.125
200 50
2012
3 61 50.875
207 51.75
4 46 52.125
210 52.5
1 52 52.375
209 52.25
2 51 52.25
2013 209 52.25
3 60
4 46

(b) From tables, the cumulative present value factor for a constant inflow at 15% for
5 years is 3.3522,

Or
PV

Hence the NPV of investment A is K 20,000  3.3522  K 67,044 .

Alternatively,
1  1  r 
n
1  1.15 5
PV  PMT  = 20,000   K 67,043.10 ,
r 0.15

As the other two investments do not involve constant inflows, and so the PVs for
individual years have tobe summed as follows:
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Investment B Investment C
Year (end) Discount Inflow (K) PV Inflow PV
factor
1 0.8696 10,000 8,696.00 40,000 34,784
2 0.7561 15,000 11,341.50 30,000 22,683
3 0.6575 20,000 13,150.00 20,000 13,150
4 0.5718 25,000 14,295.00
5 0.4972 30,000 14,916.00
NPV 62,398.50 70,617

The NPV for investments A, B and C are K67,044, K62,398.50 and K70,617
respectively. Then Investment C should be chosen since it yields the highest NPV.

9. (a) (i) Reason for using a multiple bar chart:

It would be easy to make comparisons between/among the two townships
and different income categories.

(ii) Multiple bar chart.

40
Percentage

35

30

25

20

15

10

0
Low Lower middle Upper middle Lower upper High upper
Income Level Ujeni Njani
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(b) (i) Linear programming model for monthly production:

Let x = number of Ndixia models produced

Let y = number of Zude models produced

Summary of information provided:

Item/Activity Ndixia Zude Resource availability

Assembly 8 10 2000 hours
Testing 2 5 600 hours
Tubes Zude 0 1 100 tubes
Cost 7,500 24,000
Selling Price 12,500 31,000
Profit 5,000 7,000

Hence LP model is:

Maximise P  5000 x  7000 y ,

subject to
8x  10 y  2000
2 x  5 y  600 ,
y  100 ,
x, y  0
(ii) Graphical solution:
Sketching straight line graphs:

I: 8x  10 y  2000 i.e. 8x  10 y  2000

when x  0 , y  200
y  0 , x  250
II: I: 2 x  5 y  600 i.e. 3x  2 y  600
when x  0 , y  120
y  0 , x  300
III: y  100 , y  100
 11

(Not drawn to scale)

(Sketching feasible region)

Checking all the vertices, the optimal solution is found at Q where y  40 and x  200 .

Hence Ung’onoung’ono Ltd should produce 200 Ndixia model TV sets and 40 Zude
model TV sets to get a maximum profit of

P  5000  200  7000  40  K1,280,000 .

END