THE PUBLIC ACCOUNTANTS EXAMINATIONS BOARD A Committee of the Council of ICPAU CPA(U) EXAMINATIONS LEVEL ONE QUANTITATIVE TECHNIQUES - PAPER 5 THURSDAY, 28 NOVEMBER 2013 INSTRUCTIONS TO CANDIDATES hours 15 minutes. 1. Time allowed: ‘The first 15 minctes of this examination have been designated for reading time. You may not start to write your answer during this time, 2. Section A has four questions and only three are to be attempted. Each question carries 20 marks. 3. Section B has three questions and only two are to be attempted. Each question carries 20 marks 4, Formulae and tables are provided on pages 8 - 10. \Write your answer to each question on a fresh page in your answer booklet. 6. Please, read further instructions on the answer booKeet, before attempting any question. © 2013 Public Accountants Examinations Board‘Quantitative Techniques - Paper 5 SECTION A Attempt three of the four questions in this section Question 1 (@) Three individuals A, B and C have applied for the position of a manager in a company. Candidates A and 8 have the same chance of being hired. The probability of cardidate C being hired is twice that of candidate A, Required: Find the probabilty that candidate hired is: @ A (2 mark) WB (mark) qi) oc (A mark) (©) The following frequency distribution table shows basic salaries of some accountants: Salary (Shs'000") Number of accountants 400 under 420 12 420 - under 440 27 440 — under 460 34 460 ~ under 480 24 480 ~ under 500, 15 500 ~ under 520 8 Required: Calculate the: (mean salary (7 marks) (i)_varlance of the salary (6 marks) (ll) coefficient of variation (GB marks) (Total 20 marks) Question 2 @ Five candidates for a managerial post were interviewed by two panelists, ‘The following points were awarded by each panelist: Candidote A B C OD E Panelist 5.7 58 59 56 55 2 Panelist 5.6 5.7 60 55 58 Required: Calculate Spearman's coefficient of rank correlation. (7 marks) ‘Be November 2013, Page Zoro‘Quantitative Techniques —Papor 5 (©) project has been defined to contain the following ist of activities, along with their required times for completion: ‘Activity Intermediate Predecessor Time (weeks) A - 6 8 A 3 c A ? D ic 2 E BC 4 F D 3 « Bg ie Required: (Draw @ network of the activities given above. (8 marks) (i) Find the critical path. (4 marks) (lll) Find the number of weeks it will take to complete the project. (1 mark) (Total 20 marks) Question 3 (2) _Ashop on a busy street in Kampala stocks a special type of fountain pens. Customer A ordered for 250 pens and pald Shs 3,500 for each pen, while customer B ordered for 50 pens paying Shs 5,500 per pen. Required: Given that the price (p) of each pen is @ linear function; p =x + ky where Ys the size of the order, how much money does customer C pay for an order of 80 pens? (5 marks) (b) A company manufactures and sells x television sets per month. The monthly cost and demand equations are: C= 72,000 + 6x end 7=200-% respectively, where 0 < x < 6,000 Required: Find the: (sales revente function. (2 marks) (i) production level that will realize the maximum profit. (4 marks) Gi). maximum profit "Ze November 2013 Page 30110© ‘Quantitative Tachniquae— Paper 5 ‘A phone Is among the various sources of interruption at workplace reducing efficiency. A survey found that out of 200 workers, 168 said they were interrupted three or more times an hour by phone calls and messages. Required: Find the 95% confidence level of the proportion of workers who ere Interrupted three or more times an hour. (6 marks) (Total 20 marks) SECTION B Attempt two of the three questions in this section Question 5 (@) Each year, a large company, which manufactures domestic gadgets, pays (b) its employees an annual bonus. The company accountant wishes to assess the effect of the previous year's bonus on the company output for the following year. Data relating to bonus paid (as a percentage of annual salary) and total autput (in tens of thousands of gadgets sold) over an 8 year period are indicated in the table below Previous year borus % 01234567 Following year's cutput in ‘000’ 3 6 14 15 20 18 24 25 Required: (Plot a scatter diagram of the above data. (5 marks) (Comment on the relationship shown by your scatter diagram (maximum 20 words). (2 marks) If bonus (%) is represented by x and output ('000') is represented by y, the following totals have been calculated from the data given in the table In (@) above: Yrea2e, Dyas, De =140, Dy" «2391 and Fv =56s. Required: (Calculate the correlation coefficient between bonus and output. (6 marks) (i) Determine the percentage of variation in output explained by the Increase in bonus. (2 mark) 126 November 2013 Pages of10© ‘quantiatve Techniques ~ Paper 5 (3 marks) A car dealer finds that the average price of a certain car mode! is USS 8,256. He decides to sell cars that will appeal to the middle 60% of the market in terms of price. The standard deviation is US$ 1,150, and the car sales are normally distributed, Required: Find the maximum and minimum prices of the cars the dealer will set. (6 marks) (Total 20 marks) Question 4 @) (0) (What is meant by the term crashing as used in network analysis? (1 mark) (il) Identify and explain three common smoothing methods in time series forecasting. (6 marks) To maximize the objective function P = 2x + 2y + z subject to the following constraints: arty +2esia De tdy +2226 x4 2y 432528 x20,y20,220 the table below shows the entries of the optimal solution by simplex. tableau of the above problem, x yor & Ss 7 2 oe o 4 0 1 7 o 4 0 0 0 1 os 2 0 0 A o 1B Required: (i) Interpret the tableau and stat the values of xy, 2 Si, So and Sy (6 marks) (i) Hence determine the optimal solution to the problem. (mary 28 November 2013 Pa Fry© ‘Quantitative Techniques Paper 5 ‘The least squares regression equation relating previous year’s bonus to the following year's cutput is given by output ('000') = 4.75 + 3.11 x bonus (%). () | What does the value 4.75 represent in the equation above? (2 marks) (1) fannual bonus pald last year was 10% predict the output for the current year. (3 marks) (Total 20 marks) Question 6 @ ©) © State any three advantages of using a questionnaire in data collection. (3 marks) ‘The weight of sweets in a package filed by a certain machine is normally distributed with mean of 225 gm and standard deviation 6 gm. The inspection process is designed to reject packs containing less than 215 gm (or more than 237 gm. Required Find the proportion of packs that are rejected, (8 marks) The director of Housemalds Training Institute claims that the average starting salary for maids is Shs 24,000 per month. A sample of 10 housemaids has a mean of Shs 23,450 and a standard deviation of Shs 400. Required: () Test the director's claim at 5% significance level, assuming the variable is yormally distributed. (5 marks) (li) Find the 95% confidence interval of the mean salary. (4 marks) (Total 20 marks) Question 7 @ The table shows a variable and the probability of its ocourrence. x 2 4 0 1 2 PK=x) 02 01 03 02 Required: Find the missing probability in the table and use it to compute expected value of X. "28 November 2013, Page Saf 10‘quantitative Techniques —Papar 5 (5 marks) (b) The following table shows prices and their respective quantities for 2 © market basket of grocery items in the years 2011 and 2012: 2011 2012 Ttem Price Price Quantity (Shs) (Shs) Bread 2,800 3,200 160 loaves Fish 5,000 7,000 52 kg Mik 1,000 1,200 134 litres Beans 1,200 1,600 570 kg Required: Galaslate the Paasche price index using 2011 as base year, (6 marks) Three different projects X, Y and Z are to be evaluated. Each project requires an inital investment of $12,000 and pays off in the folowing year, + Project x pays $14,000 with certainty. ‘+ Project Y pays either $10,000 or $20,000 with probability 0.5 In each case, + Project 2 pays nothing with probabilty 0.78 and $60,000 with probability 0.22 ‘A summary is shown in te table: Project Pay off ‘Probability x 44,000 1.00 Y 10,000 (0.50 20,000.50 z 0 078 60,000.22 Required: (i) Calculate the expected value of each project. (6 marks) (il) Expected profit from each project. © marks) (Total 20 marks) ‘BeNovember 2013, Page 7 of 10tantiatin Techniques — Paper 5 ferent ae Scrmen gests = rv-(IE)) bys Oa} key (Ey) n(n? =I) 2.100 Coefficient of correlation, r = Spear’s Rank correlation coefficient =1— 4, Coefficient of variation, for a samp Coefficent of variation, for populations = 100% ia 7. Geometric mean (GM) = Ymxx xR eR Harmonic mean (HM) 6, The tvalue is zt 9, Sample standard deviation, 10. Pearson coefficient of skewness (Sk)=3 @=medon) 41, Index numbers: (@) Price relative Index = 21100 » (b) Weighted zagregate price index fest ci00 (© Laspeyre's price index = &2*") 109 Lea) (@)_Paasche's pice index= 22) 109 Ler 12, Maximum error of estimation, € = Z, 18 November 2013‘Quontitaive Techniques Paper Ee ae as aE belgie see ‘heabese Ao) fee eh a te 7 sed a aN.) On 1 osaey Sable) 40) A ma>meoen-r , 3. Resi)o1-27=20 ae 228 November 2013 Paged of 10‘quantitative Tachniquas Paper 5 ee <= Sermon tec I ‘i se bay desi of btn Tepe sald erin 1200230. Une) prow fro te (Beet r ee sweety at +} >1Qis20. “The ph ow te fm fo aatn oy 2 Te ‘eda epee pbb Farge he ine le wih potable ‘ogee fren di ob ata ig eu e ‘tmbuon eprom te elton NO, showy a ie 8 November 2033 Page 10 10