STRICTLY CONFIDENTIAL

THE INSTITUTE OF CHARTERED ACCOUNTANTS

IN MALAWI

2014 EXAMINATIONS
ACCOUNTING TECHNICIAN PROGRAMME
PAPER TC 3: BUSINESS MATHEMATICS & STATISTICS
(DECEMBER 2014 )

TIME ALLOWED: 3 HOURS

SUGGESTED SOLUTIONS
 1

SECTION A

1. (a)
a  22  1  a 2 = 
a 2  4a  4  1  2a  a 2 
,
3 1  a   a 3  3a  a
a 2  4a  4  1  2a  a 2
= ,
3  3a  a
 2a  3
=  1,
 2a  3
b c  13  d  2 3  13   2 2  4 3  2
(b) A = = =,
2e  3 f 2  8  3 4 2  8  3 4
8 5 8 5
= =  20 ,
16  12 4

 2  3   4   2  4  (3)  (1)   11 
2. (a) i) AB =     =   =   ,
 5 1   1  5  4  1 (1)  19 

1 0 1   2 0
ii) Since C    , then C 1 =  ,
3  2 det C    3 1 

1
=
1  (2)  0  3

 1   2 0
=  
2   3 1 

2 x  1 7  5x
(b)  3
5 4
4 2 x  1  5 7  5 x 
  3,
20
8 x  4  35  25 x
  3,
20
 33x  60  39
 33x  99
99
i.e. x  3
33
 x  3,
 2

3. (a) i) Data are the raw facts collected for processing while information is the
processed facts or data.
ii) Characteristics of good information:
I. Accuracy – Information needs to be accurate enough for the use it is going to
be put.
II. Timeliness – Information must be on time for the purpose for which it is
required.
III. Completeness – Information should contain all the details required by the
user.
[Others: reliability, relevant easy to use etc]

(b) Let the cost price be x . Then 1.165  x  840 ,

840
so x   509.0909 ,
1.165
VAT increased to 17.5  new price is:
1.175  K 509.0909  K 598 to the nearest Kwacha,

4. (a) i) Table of values

x 0 10 20 30 40
y =1000x 0 10000 20000 30000 40000
y = 10000+600x 10000 16000 22000 28000 34000

Plotting the graphs:

45000 y
40000 y = 1000x
35000
30000 Y=10000+600x
25000
20000
15000
10000
5000
0 x
0 10 20 30 40 50

ii) Reading from the graph, x  25, y  25,000

iii) Name given to this point is breakeven point.

 3

(b) i) Mean, x   x = 20  15  .....  2  16  213  13.313 ,

n 16 16
ii) Variance,
 x  x   20  13.313  15  13.313  .....  2  13.313  16  13.313
2
2 2 2 2
 2

n 16
375.4375
=  23.465 ,
16

Q5. (a) i) histogram - each block represents a class,

ii) discrete data - can only take a limited number of values,
iii) ordinal scale - data is shown simply in order of magnitude
iv) pictograph - comprises a set of small pictures,
v) pie chart - segments or slices represent categories,

(b) Let x be the number of cases of Product D bought.

Total amount spent = 784  20  820 10  850 12  860  x ,

= 15600  8200  10200  860 x ,

= 34080  860 x

Since Ajimwiche spends K46,980 in total, then

34080  860x  46980 ,

i.e. 860 x  46980  34080  12900 ,

12900
x  15 ,
860

Hence the total number of items of Product D bought is

15 12  180 ,

6. (a) Calculating index numbers

Year 2007 2008 2009 2010 2011 2012 2013

Profits 1.2 1.5 1.8 1.9 1.6 1.5 1.7
(K million)

Index 1 .2 1.5 1.8 1 .9 1 .6 1.5 1 .7

Base=2010  100  100  100  100  100  100  100
1 .9 1 .9 1 .9 1 .9 1 .9 1 .9 1 .9
 63  79  95  100  84  79  89
 4

120

Index
100

80

60

40

20

0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Year
(b)

SECTION B (40 MARKS)

7. (a) Here N = 20 and x = 5. Then the number of different samples of 5

that can be selected from the 20 ventures is

20!
20
C5   15,504 ,
20  5!5 !
(b) (i) Internal Rate of Return – This method involves calculating the rate at which
the Net Present Value of the project equals zero. If the cost of capital is more
than this rate the project will be rejected.

Advantages:
I. It recognises the time value of money.
II. It values all the cash flows, earlier or later.

Disadvantages:
I. It is difficult to understand for others to understand why another rate has to
be calculated.
II. Not helpful for comparing two mutually exclusive investments.

(ii) Payback period – This method calculates the time it will take for a project to
recoup the initial investment. A project with a shorter payback period is
preferred.

Advantages:
I. Simple and easy to understand and compute.
II. It is universally used.

Disadvantages:
I. Time value of money is not recognised.
 5

II. Only cash flow before the payback period is considered while cash flow
after the payback period is not recognised.

(c) For option A: P = K20,000, n  10  4  40 , r  0.015 ,

So value V  P 1  r n  20000 1  0.01540  K 36,280.37 ,
For option A: P = K20,000, n  10  2  20 , r  0.032 ,
So value V  P 1  r n  20000 1  0.03220  K 37,551 : 21 ,
On the basis of higher returns, option B is better.

8. (a) i) Relative frequency distribution:

Name Frequency Relative

frequency (%)
Nkhoma 5 20
Phiri 3 12
Banda 7 28
Mkandawire 2 8
Tembo 4 16
Mbewe 4 16
Total 25 100

5 3
M1: Workings:  100  20 ,  100  12 etc etc
25 25
ii) Pie chart:
Slices: Nkhoma: 20% of 3600  720
Phiri: 12% of 3600  43.20
Banda: 28% of 3600  100.80
Mkandawire: 8% of 3600  28.80
Tembo: 16% of 3600  57.60
Mbewe: 16% of 360 0  57.6 0 ,
 6

Mbewe
Banda
Mkandawire

Phiri

Nkhoma
Tembo

A2 (Accurate labelled slices)

(iii) The modal last name is Banda.

(b) (i) Regression investigates relationships between variables while correlation measures the
degree of association between variables.

(ii) Ranking data from lowest to highest:

Cars: A B C D E F G H I J
Age: 9 15 24 30 38 46 53 60 64 76
Rank: 1 2 3 4 5 6 7 8 9 10,

Cars: A B F D G E C H I J
Stop,: 28.4 29.3 35.3 36.2 36.2 36.5 37.6 44.1 44.8 47.2,
Rank: 1 2 3 4 5 6 7 8 9 10,
i.e 1 2 3 4.5 4.5 6 7 8 9 10,
Hence

Car A B C D E F G H I J

Age rank 1 2 3 4 5 6 7 8 9 10

Stopping 1 2 7 4.5 6 3 4.5 8 9 10

rank

Difference d 0 0 -4 - -1 3 -2.5 0 0 0
0.5

d2 0 0 16 0.25 1 9 6.25 0 0 0 d 2
 32.5
,
 7

So Spearman’s rank correlation coefficient is:

6 d 2 6  32.5
r  1 = 1  0.803 ,

n n 1
2
  
10 10 2  1

Comment: There is a positive and strong correlation car ages and stopping distance
performance.

9. (a) i) marginal cost is C x   100  0.06 x  0.000012 x 2 ,

7,500 ngulis are produced and sold, then

C 7500  100  0.06  7500  0.000012  7500 2 ,

= K325,

Interpretation: when the company produces and sells 7,500 the 7501 st nguli will cost
an extra K325.

ii) marginal profit:

Since the demand function is p x   200  0.005x , then the revenue function is
R x   x p x   x200  0.005x   200 x  0.005x 2 ,

Then profit is

Px   Rx   C x  = 200 x  0.005x 2  75,000  100 x  0.03x 2  0.000004 x 3 ,

=  75,000  100 x  0.025x 2  0.000004 x 2 ,

Marginal profit function is

Px   100  0.05x  0.000012 x 2 ,

When 7,500 are sold, then P7,500  100  0.05  7,500  0.000012  7500 2 ,

= - K200,

Interpretation: when the company produces and sells 7,500 ngulis, the company will incur
a loss of K200 for each nguli.
 8

(b) i) Multiple bar chart:

No. of 70
respondents
60
50
40
30
20
10
0
Under 25 25 to 44 45 to 64 Above 64
Age group

Agree No view Disagree

ii) P(disagrees or is in the 25 to 44 age group)

= P(disagrees) + P(in 25 to 44 age group) - P(disagrees and in 25 to 44 age group),

133 78 16 195
=    (or 0.65),
300 300 300 300

END