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THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKA

CERTIFICATE IN ACCOUNTING & BUSINESS - I EXAMINATION MARCH 2012

02104 - BUSINESS MATHEMATICS AND STATISTICS

PAPER 'A' - MULTIPLE CHOICE QUESTIONS - (40 MARKS)

TIME ALLOWED ONE (01) HOUR

Instructions to candidates (i) (ii) Answer all the questions. A booklet containing formulae & mathematical tables is provided for your reference. It should be returned to the supervisor at the end of the paper. Only one answer is correct out of the four given answers for each question Answer should be given in the special answer paper given to you. Number of the most suitable answer to the relevant question should be entered in the answer paper against the relevant question number. The answer paper should be handed over to the Supervisor at the end of the time allocated for the paper i.e. 1 hour. Each correct answer carries 2 marks.

(iii) (iv)

(v)

(vi)

Question No. 01 Solve 5 log2 t - 2 log2 x = log2 125 in terms of x (1) (t5 /125) (2) t(5/2) / 5 (3) ( t5 ) / 25 (4) (t/5)5 (2 marks) Question No. 02 A father wants to calculate the total amount requires over the next 12 years as his childs school term fees. Term fee for the 1st term of the school is Rs 5,000/- and will be increased by Rs 500 every term thereafter. What is the total amount that father has to pay over the next 12 years as his childs school term fees. Assume that there are 3 terms per year. (1) Rs. 197,500 (2) Rs. 22,500 (3) Rs. 495,000 (4) Rs. 93,000 (2 marks) Question No. 03 The equation of the line through the point (1,2) having slope 1 (1) y=x+2 3 -1 (2) y= 1 x+1-2 3
3

is

(3)

x=

3 y+12 3

(4)

y= 3 x + 2 3 -1 3 (2 marks)

Question No. 04 A company invests Rs 2 million in a project that gives a return of Rs 100,000 at the end of each year in perpetuity. Assume that the interest rate is 6% compounded annually; determine the Net Present Value (NPV) of the investment. (1) Rs. (333,333) (2) Rs. 1,666,667 (3) Rs. 1,900,000 (4) Rs. 31,666,667 (2 marks) Question No. 05 The marginal cost function of a product manufactured by a company is given by MC = 60 +3x , where x is the number of units manufactured. Find the incremental cost when number of units manufactured increased from 10 to 20. (1) Rs. 30 (2) Rs. 750 (2) (3) Rs. 3,000 (4) Rs. 1,050 (2 marks)

Question No. 06 The solution of the equation 2 (x + 1) 1/3 = 2 is (1) 0 (2) 7 (3) 3.5 (4) 2 (2 marks) Question No. 07 Analysis of marks of last Business Mathematics and statistics paper of ICASL examination revealed that the paper was generally very easy as approximately 75% of the candidates have scored marks over 50. The distribution of marks would be: (1) (3) Normally distributed Positively skewed (2) (4) Negatively skewed Symmetric distribution (2 marks) Question No. 08 Business analyst analyzed the term test marks of 125 students of a class and represented the data in the following cumulative frequency diagram
Cumulative Frequency percentage

100% 75% 50% 25% 0% 0 10 20 30 40 50 Marks 60 70 80 90 100

What is the quartile deviation of the distribution? (1) 40 (2) 50 (3) 60 (4) 20 (2 marks) Question No. 09 An examination is set every month. Kamal takes examination each month until he passes. Each time he takes the examination, the probability that he passes is 0.8. Find the probability that Kamal passes the examination in either the first or second month. (1) 96 100 (2) 90 100 (3) 80 100 (4) 75 100 (2 marks) (3)

Question No. 10 The data used for a statistical analysis that were originally collected for different purpose in the past are called: (1) (2) (3) (4) Qualitative data Unreliable data Secondary data Observations (2 marks) Question No. 11 Suppose the average number of accidents per day at newly opened southern highway is five. What is the probability that zero accidents occur on the next day (1) 0.26560 (2) 0.140320 (3) 0.006741 (4) 0.875311 (2 marks) Question No. 12 The probability of number of unemployed adults (age over 18 years) in 100 randomly selected families in Colombo district summarized in the following probability distribution Number of unemployed adults in the family Probability 0 0.1 1 0.25 2 0.5 3 0.1 4 0.05

(Hint e = 2.718)

What is the expected value of number of unemployed adults in a family? (1) 0.265 (2) 2 (3) 0.5 (4) 1.75 (2 marks) Question No. 13 A team consists of 3 engineers and 2 supervisors needs to be selected to send for an overseas project. The project company shortlisted 10 engineers and 5 supervisors who are equally qualified to select for the required team. How many ways the team consists of 3 engineers and 2 supervisors can be arranged? (1) 14,400 (2) 1,200 (3) 130 (4) 3,003 (2 marks) Question No. 14 Tickets for a show were priced at Rs. 10, Rs. 20, Rs. 50 or Rs. 200. The number of tickets sold at each price is shown in the table. Price (Rs.) Number of tickets sold The mean price is (1) Rs. 15 (2) Rs. 22 (3) (4) Rs. 30 (4) Rs. 25 (2 marks) 10 84 20 68 50 22 200 6

Question No. 15 When two variables are perfectly correlated, the correlation coefficient r would equal to (1) -1 r 1 (2) 1 (3) -1 or +1 (4) 0 (2 marks) Question No. 16 These are the marks obtained by six students in Mathematics and Physics. Mathematics Physics 67 70 42 59 85 71 51 38 39 55 97 62

The Spearmans coefficient of rank correlation is (1) - 0.20 (2) +0.66 (3) -0.35 (4) - 0.45 (2 marks) Question No. 17 The fundamental difference between seasonal variation and the cyclical variation of a time series is : (1) (2) (3) (4) Magnitude of the variation Recurring period Not like seasonal variations, cyclical variations are random or caused by special events All of the above. (2 marks)

Question No. 18 Following data relates to the monthly sales figures for past two years. The data are to be analysed to identify the trend and to do a sales forecast for 2012. Jan 25 34 Feb 31 39 Mar 28 36 Apr 48 62 May 18 24 Jun 22 28 Jul 32 36 Aug 36 40 Sept 30 29 Oct 42 48 Nov 60 82 Dec 72 90

2010 2011

What is the 3 monthly moving total for May, 2010? (1) 88 (2) 29.3 (3) 42 (4) 101 (2 marks)

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Question No. 19 A weighted aggregate price index where the weight for each item is its base period quantity is known as the (1) (3) Laspeyres Index Consumer Price Index (2) (4) Paasche Index Producer Price Index (2 marks) Question No. 20 The amount of money spent on advertising by a multinational company is linked to an index shown below. Year Index Advertising expenditure (Rs. million) 1 100 2 132 82 3 140 4 168 5 210

The amount spent on advertising in year 5 is: (1) (3) Rs. 90.2 million Rs. 130.45million (2) (4) Rs. 172.2 million Rs. 338.04 million (2 marks)

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THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKA CERTIFICATE IN ACCOUNTING & BUSINESS - I EXAMINATION MARCH 2012 PAPER 'B' (60 marks) 02104 - BUSINESS MATHEMATICS AND STATISTICS
Time allowed : 2 hours Marks : 60 marks

Instructions to candidates: (1) (2) (3) (4) Answer any five (5) questions and submit all workings. Begin each answer on a separate page. A booklet containing formulae & mathematical tables is provided. This should be returned to the supervisor at the end of the paper. All answers should be in one language, in the medium applied for, in the answer booklets provided.

__________________________________________________________________________________________

Question No. 01 (a) In order to optimize the productivity, a new factory floor is designed as a rectangular floor having a length of 12 m longer than the width. The proposed factory is used to fix 40 sewing machines which require a space of 4m2 to operate one machine as per the layout shown below.
4m2

Find the length and the width of the proposed factory.

(4 marks)

(b)

A project requires an initial investment of Rs 70 million & forecast that it will generate cash flows over the project life of 4 years as follows: Year Cash (Rs000) Discount @ 10% Flow factor 1 0.909 0.826 0.751 0.683 0 (70,000) 1 10,599 2 16,136 3 32,338 4 25,311

In addition to the above cash flows, the machinery used for the project can be sold for scrap value at the end of the project life. In order to make the project to be viable, what should be the minimum scrap value of the machinery at the end of four years? (To the nearest Rs000) Assume a discount rate of 10% p.a. (c) (5 marks)

The starting annual salary of a recently joined executive of a company is Rs 360,000 and will be increased by 10% every year thereafter. He started building a cash reserve in a non interest paying account by depositing 25% of his salary every year as savings for the future. Calculate the value of his cash reserve after 15 years. (3 marks) (Total 12 marks)

Question No. 02 Total daily operational cost of a tea factory follows a linear relationship with the quantity of tea processed per day. Total daily operational cost of processing 1,000 kg of tea per day is Rs. 380,000. When the processed quantity increased to 2,200 kg per day, the total daily operational cost increased to Rs.524,000. (a) Calculate the variable cost per kilogram of tea processed and the daily fixed cost of the factory. (3 marks) Tea produced by the factory is sold at a price of Rs 250 per kilogram at the tea auction. State the revenue function and daily total cost function Graphically represent the revenue function and the daily cost functions and identify the break-even point. (Note : Use a graph sheet and select the scale from 0 to 3,000 kg in intervals of 500 kg as the horizontal axis) (5 marks) (c) Due to the recent wage hike for estate workers, variable cost has been increased to Rs. 170 per kilogram of tea processed. At what price tea should be sold at the auction in order to maintain the same break even quantity? (4 marks) (Total 12 marks) (2) (i) (ii)

(b)

Question No. 03 (a) Anura requires to purchase a 24 inch colour TV. He is evaluating whether to go for easy payment installment scheme or an outright purchase. Easy Payment Cash outlay Initial deposit of Rs. 5,000 following with equal 8 instalments of Rs. 8,000 per month Outright Rs. 60,000

Assuming a discount rate of 12% per annum, evaluate which option that Anura should select. (5 marks) (b) An agricultural research officer wants to study the impact on yield of a recently introduced fertilizer for fruit cultivation. For the study, he collected 100 mangoes harvest from a farm that used the fertilizer and measured the weight of each mango. The results of the weights of mangoes measured are shown in the table below. Weight of a mango, w (g) 120 < w 160 160 < w 180 180 < w 200 200 < w 220 220 < w 240 240 < w 260 260 < w 300 (i) (ii) Number of mangoes 4 7 10 20 32 21 6

What is the class that the median of the distribution can be found? Construct the histogram & clearly indicate the modal value of the distribution (7 marks) (Total 12 marks)

Question No. 04 (a) List four (04) measures that can be used to measure variation of a set of data. (2 marks) (3)

(b)

Due to the continuous increase in orders during past few months, the management of a company wants to decide whether to recruit new workers or to introduce a more attractive overtime scheme to encourage existing workforce to work additional hours. As a part of the study, you are given below following overtime data relates to last month to identify the existing overtime patterns of existing 125 operation workers. Number of Overtime hours (x) claimed by an employee Less than 4 hours 4x<8 8 x <12 12 x <16 16 x <20 20 x< 24 24 x <28 28 x <32 (i) (ii) Number of employees 3 6 10 21 42 27 11 5

Calculate the arithmetic mean and standard deviation of the distribution (8 marks)

Estimate the probability that a randomly selected employee of the operations staff has last month overtime claim of 16 to 24 hours. (2 marks) (Total 12 marks) Question No. 05 (a) An executive travels 30 km daily from his office to residence (both ways). During the weekend he travels to see his mother which amounts to 100 km (both ways). Assuming there are 25 working days, and 3 weekends (Saturday & Sunday) in a month, (i) (ii) calculate his average travel per day. (2 marks) his car works an average 7 km per litre of fuel. What would be the monthly impact of the increase of fuel cost since the petrol prices has increased from Rs. 127 to Rs. 149 per litre? (1 mark)

(b)

The automated packing unit of a milk powder processing plant has been programmed to pack 400g of milk powder per pack. Although the pack indicates that it contains 400g, due to a programming error, the actual mean weight of a pack in the recently processed batch was 410g and 10% of the packs contained less than the amount indicated in the pack. Assuming that the amount of milk powder filled per pack is normally distributed, Find, (i) Standard deviation of the amount that filled per pack. (3 marks) (ii) Percentage of packs in the batch that contains more than 425g (3 marks) (iii) It is the company policy that only the packs that contain at least 99% of the weight indicated in the pack will be released to the market. What percentage of the batch under consideration will be rejected? (3 marks) (Total 12 marks) (4)

Question No. 06 (a) (b) What do you mean by type I error in hypothesis testing? (3 marks)

The University Grants Commission wants to investigate whether the knowledge level of students enter the university from district A is better than the students enter the university from other districts. In order to investigate this, UGC collected the first year examination results of 50 management undergraduates randomly selected from district A & 60 management undergraduates randomly selected from other districts who entered the university last year. The data collected showed that the average marks of 60 first year undergraduates from other districts is 54.63 with a standard deviation of 11.58 while the marks of 50 first year undergraduates from district A has an average of 59.8 with a standard deviation of 13.24 (i) (ii) (ii) Compute the standard error of difference between two means. Is this a one tailed or two tailed test? Test the appropriate hypothesis Using = 0.01 (3 marks) (2 marks) (4 marks) (Total 12 marks)

Question No. 07 (a) (b) What do you mean by two variables are correlated? (2 marks)

A research analyst of a real estate company has been asked to do a demand study on real estate properties in a particular region. As a part of the study and in order to find whether there is a correlation between the price and demand for properties, he has collected the information on selling prices and number of real estate units (brand new housing units) sold during the year 2010 in that region. The information collected is tabulated below: Average Price of a real estate Number of units sold unit in the region (Rs. million) during the year 2010 5.0 126 7.5 103 10.0 82 12.5 75 15.0 82 17.5 40 20.0 20 (i) (ii) Calculate the coefficient of correlation and comment on the level of correlation between the two variables. Compute the coefficient of determination and interpret the value. (10 marks) (Total 12 marks) (5)

Question No. 8

(a)

Explain what is meant by irregular variations in a time series. Give an example for an irregular variation (2 marks)

(b)

Senior management of a supermarket chain intends to do a study to identify the quarterly sales patterns of its main outlets. Following data refers to the quarterly sales (Rs. million) of one of its main outlet during past 4 years. Q1 420 481 564 Q2 392 406 477 545 Q3 454 517 598 670 Q4 361 395 422 -

2008 2009 2010 2011

Assuming that you have been appointed by the senior management of the supermarket chain to undertake the study, (i) (ii) Calculate the 4 quarter centered Moving averages for this data. Find the seasonal indices using Additive model. (4 marks) (Total 12 marks) (6 marks)

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