THE PUBLIC ACCOUNTANTS EXAMINATIONS BOARD

A Committee of the Council of ICPAU

CPA(U) EXAMINATIONS

LEVEL ONE

QUANTITATIVE TECHNIQUES - PAPER 2

TUESDAY 15 MARCH, 2022

INSTRUCTIONS TO CANDIDATES
1. Time allowed: 3 hours 15 minutes.
The first 15 minutes of this examination have been designated for reading
time. You may not start to write your answer during this time.
2. This examination contains six questions and only five questions are to be
attempted. Each question carries 20 marks.
3. Formulae and tables are provided on pages 9 – 19.
4. Write your answer to each question on a fresh page in your answer
booklet.
5. Please, read further instructions on the question paper and answer
booklet, before attempting any question.

© 2022 Public Accountants Examinations Board

 Quantitative Techniques – Paper 2

Attempt five of the six questions.

Question 1
(a) Explain the term stratified sampling and give its three advantages.
(4 marks)
(b) Two students Elijah and Eliot sat for Business Law, Quantitative
Techniques and Taxation examinations in October 2021. The table below
shows their marks and weights attached to each exam:
Marks Business Law Quantitative Techniques Taxation
Elijah 80 72 46
Eliot 64 82 40
Weight 2 x 3
Required:
(i) Determine the value of x for which Elijah and Eliot’s examination
marks have the same weighted mean.
(4 marks)
(ii) Find the value of Elijah’s weighted mean.
(2 marks)
(c) A researcher was interested in comparing the students’ performance in
Business Mathematics and Statistics. In order to determine the
performance, he administered a quiz containing section A (Business
Mathematics) and section B (Statistics). The maximum score for each
section was 20 marks .The bivariate results obtained were summarised in
the frequency distribution table provided below.
Marks in Statistics Marks in Mathematics
0-4 4 - 8 8 - 12 12 - 16 16 - 20
0-4 1 1 2
4-8 1 4 5 1 1
8 - 12 1 2 4 6 1
12 - 16 1 3 2 5
16 - 20 1 5 3
Required:
Determine which section had better spread of marks.
(10 marks)
(Total 20 marks)

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 Quantitative Techniques – Paper 2

Question 2
(a) In a certain firm dealing in toxic waste disposal, when an employee arrives
late for duty, there is one in four chances that he/she will be caught by the
supervising manager. On the first occasion an employee is caught late,
he/she is given a warning and dismissed on the second occasion.
Required:
Using a probability decision tree, find the probability that an employee who
is late three times is not dismissed.
(6 marks)
(b) Statistical data showed that 18.6% of the male students and 18.9% of the
female students who completed their degree course at Makerere University
passed with second class upper in 2019. If 250 male students were
sampled,
Required:
Find the probability that more than 50 male graduates passed with a
second class upper degree.
(7 marks)
(c) A researcher was interested in determining the performance of small
businesses in Kampala suburbs. He collected data on daily sales and profit
from a sample kiosk from each of the suburbs as summarized in the table
below.
Kiosk location Sales (Shs) Profit (Shs)
Kanyanya 546,000 65,000
Namuwongo 487,000 102,000
Kalerwe 150,000 -10,000
Katwe 317,000 50,000
Nakawa 264,000 25,000
Kasubi 236,000 35,000
Natete 396,000 78,000
Nansana 533,000 84,000
Bwaise 484,000 57,000
Kamwokya 485,000 65,000

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 Quantitative Techniques – Paper 2

Required:
(i) Using spearman’s rank correlation coefficient method, determine the
coefficient of correlation between sales and profit.
(6 marks)
(ii) Comment on the relationship between sales and profit.
(1 mark)
(Total 20 marks)
Question 3
(a) Explain the use of a range chart in quality control.
(2 marks)
(b) According to the head count of all the employees in the 2015 census, it
was revealed that the male population in the ministries of Public Service
and Education were 30% and 25% respectively.
Required:
Test at 5% level of significance whether the difference was likely to be as
result in the differences within the samples of 1200 and 900 respectively.
(8 marks)
(c) A random sample of 100 families was selected to establish the price index
for their evening expenditures. The following mean data was obtained in
their domestic expenditure for the years 2020 and 2021.
Form of expenditure cost amount Number of times
2020 2021 2020 2021
Movies 20,000 20,750 6 3
Dinner 40,000 50,000 31 35
Game parks 20,000 30,000 3 6
Sports events 40,000 65,000 10 13
Live entertainment 30,000 50,000 3 6
Taking 2018 as a base year, calculate Bowley’s index number which is
given by the formula
(10 marks)
(Total 20 marks)

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 Quantitative Techniques – Paper 2

Question 4
(a) With examples, explain the term statistic as applied in sampling.
(2 marks)
(b) The table below shows the average termly marks scored by a student in
the end of term exams from senior one in 2017 up to the time he sat
UNEB exams in 2020.
Year Termly marks %
1st term 2nd term 3rd term
2017 36 50 54
2018 40 45 60
2019 39 46 70
2020 49 50 ---
Required:
(i) Compute the 5 point moving averages for the marks.
(5 marks)
(ii) Draw a graph to represent 5 point moving averages superimposed
on the same graph with the termly average scores.
(5 marks)
(iii) Estimate from your graphs the average marks scored by the student
in the UNEB exams sat in third term 2020.
(2 marks)
(c) The table below shows the cargo distance charge chart used by Kamunye
transporters from Kabale town on one of their routes.
Distance (km) 0 8 11 12 x 16 20
Charge (Shs) 0 5,000 y 8,000 8,500 10,000 15,000
Required:
Using linear interpolation determine the:
(i) Cargo charge  y  for a distance of 11 km from Kabale.
(3 marks)
(ii) Distance in km  x  from Kabale the cargo would cover after paying
Shs 8,500.
(3 marks)
(Total 20 marks)

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 Quantitative Techniques – Paper 2

Question 5
(a) Gonza Office Supplies Company located in Bwaise a Kampala suburb deals
in producing furniture for different offices. At their workshop they
specialise in secretarial, dinning and conference chairs and have three
different machines which they use in their work. Each type of chair
requires time on the three different machines as indicated in the table
below:
Secretarial Dinning Conference Available hours
Hours on machine A 1 1 1 30
Hours on machine B 2 3 2 53
Hours on machine C 1 2 3 47
Gonza Office Supplies Company makes a profit of Shs 40,000, Shs 80,000
and Shs 70,000 on secretarial, dinning and conference chairs respectively.
Required:
(i) Express the above information as a linear programming model.
(2 marks)
(ii) Using simplex tableau method, determine the number of chairs
should Gonza office supplies make daily in order to maximise its
profits.
(9 marks)
(b) Muko holdings is firm engaged in mining wolfram in Rubanda district.
Muko holdings has established that its revenue function is
R(q)  2q 3  40q 2  8q while its production cost function is given by
C (q)  3q 3  19q 2  80q  800 ( q represents the quantity in tons, and R is the
revenue in thousand shillings).
Required:
(i) Determine the quantity that maximises profit.
(7 marks)
(ii) Compute the revenue per ton that maximises profit.
(2 marks)
(Total 20 marks)

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 Quantitative Techniques – Paper 2

Question 6
(a) Explain the main use of a network diagram and Gantt chart in project
implementation.
(4 marks)
(b) Kisenyi Youth Association has secured funding from Entrepreneurs
Development Fund which they would like to invest in two projects; mobile
money agent or agent banking. The expected profit or loss for each
project and their likelihood are as shown:
Decision alternatives States of nature
High demand (Shs) Low demand (Shs)
Mobile money 1,250,000 750,000
Agent banking 3,000,000 (1,870,500)
Probability 0.7 0.3
Required:
(i) Advise the Kisenyi youth association on the decision to take under
conditions of risk based on the expected monetary value approach.
(5 marks)
(ii) Compute the expected value of perfect information.
(3 marks)
(c) The Director of ABC Road Construction Company has secured a contract to
construct a road bypass. In order to carry out the work effectively, he has
decided to first pre-test project sample with activities marked A,B C up to J
with duration times and immediate predecessor activities shown in the
table below:
Activity Duration (weeks) Immediate predecessor activity
A 7 None
B 6 None
C 8 None
D 4 A
E 5 A, B, C
F 9 C
G 3 F
H 2 D
I 4 E, G
J 3 F

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 Quantitative Techniques – Paper 2

Required:
(i) Construct an activity on arc network indicating forward pass for the
project.
(5 marks)
(ii) Determine critical activities and the optimum duration of the project.
(3 marks)
(Total 20 marks)

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 Quantitative Techniques – Paper 2

n!
1. Combination n Cr 
(n  r )!r!
n!
2. Permutations n pr 
(n  r )!
3. Mean of the binomial distribution= np

4. Standard deviation = npq

5. Variance of the binomial distribution  np(1  p)

pq
6. Standard error of population proportion S ps 
n
6 d 2
7. Spearman’s rank correlation coefficient r  1 
n(n 2  1)
Product moment coefficient of correlation =
8. n xy   x  y
( n x 2  ( x ) 2 )  ( n  y 2  (  y ) 2 )
crash cost – normal cost
9. Cost slope 
normal time – crash time
n
Harmonic mean (ungrouped data) hm 
10. 1
x
11. Sample mean x
x
n
n
Harmonic mean (grouped data) hm 
12. f
x
Q3  Q1
13. Quartile coefficient of dispersion 
Q3  Q1
Q3  Q1  2Q2
14. Bowley’s coefficient of skeweness =
Q3 Q1

Mean x  A   Mean x  
fd fx
15. or
f f
N 
  Cfb 
16. Median  Lb   2 C
 fm 
 
 

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 Quantitative Techniques – Paper 2

 d1 
17. Mode  lm   C
 d1  d 2 

Variance Var ( x)  
  fx 
2 2
fx
18.  
f 
  f 


19. Standard deviation   fx 2

x 2

 f (x  x) 2

f f
20. Sample standard deviation s
 (x  x) 2

n 1
21. Least squares regression equation of y on x is given by; y  a  bx
n xy   x y
Where; b  and a
 y  b x
n x   x 
2 2
n n
22. Least squares regression equation of x on y is given by; x = c +dy
n xy   x  y
Where c   
x d y
and d
n n n y 2  (  y ) 2
x µ
23. Standardising normal. z

x  x2
24. Central Limit theorem  12   2 2
n1  n2
s
24. Confidence interval for sample mean  x  t / 2
n

2 
O  E 2
25.
Chi- square E
pq
26. Confidence interval of proportion  p  z 2
n
 
3 x  median 
( x  mode )
27. Pearson coefficient of skewness Sk  or Sk   
sd sd

28. Expectation E  X  =  xP ( X  x )

Laspeyres’ price index = 

( p1  q0 )
29.  100
 (q 0  p0 )

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 Quantitative Techniques – Paper 2

30. Paasche’s Model =

 ( p  q )  100
1 1

 (q  p )
1 0

31. Weighted aggregate price index 

 wv n
 100
 wv 0

32. Additive law of probability; P( A  B)  P( A)  P( B)  P( A  B)

33. Conditional probability P A B 

P( A  B)
P( B)
 

34.  
Independence of A, B P A B  P ( A)orP ( A  B )  P ( A)  P ( B )

b(1  r ) n  b
35. Continuous compounding A  P (1  r )  n

r
vu  uv
1 1
u
36. Quotient rule of differentiation f  2
; where f 
v v
x
37. PoissonModelP X  x   e 
x!
Extrapolation
38. x  x1
y x  y1  ( y 2  y1 )( )
x 2  x1
Interpolation
39. y 2  y1
y x  y1  ( x  x1 )( )
x 2  x1

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