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ASSOCIATION OF ACCOUNTING TECHNICIANS OF SRI LANKA

LEVEL I EXAMINATION - JULY 2023
(102) BUSINESS MATHEMATICS AND STATISTICS
27-08-2023
• Instructions to candidates (Please Read Carefully): Morning
[09.00 – 12.00]
(1) Time: 03 hours.
No. of Pages : 10
(2) All questions should be answered. No. of Questions : 06
(3) Answers should be in one language, in the medium applied for, in the booklets provided.
(4) Submit all workings and calculations. State clearly assumptions made by you, if any.
(5) Use of Non-programmable calculators is only permitted.
(6) Mathematical Tables will be provided.
(7) Action Verb Check List with definitions is attached. Each question will begin with an action verb
excluding OTQ’s. Candidates should answer the questions based on the definition of the verb given
in the Action Verb Check List.
(8) Formulae Sheets are attached.
(9) 100 Marks.

SECTION A
Objective Test Questions (OTQs)
(Total 40 marks)

Question 01
Select the most correct answer for question No. 1.1 to 1.10. Write the number of the selected
answer in your answer booklet with the number assigned to the question.

1.1 If, 4 + 4x = x + 16, the value of x is:

(1) 6 (2) 5 (3) 4 (4) 2

(03 marks)

1.2 Kumara borrowed a loan of Rs.250,000/- from a friend at an interest rate of 18% per
annum payable in 3 years and the interest is calculated based on a simple interest scheme.
If the loan is settled at the end of 3rd year, the total interest for 3 years would be:

(1) Rs.160,758/- (2) Rs.155,000/- (3) Rs.135,000/- (4) Rs.120,758/-

(03 marks)

1.3 Perera has invested a certain amount in a fixed deposit of a bank at an annual interest rate
of 12% compounded quarterly. The maturity value of the fixed deposit at the end of 3rd
year would be Rs.228,122/-. The initial amount invested in the fixed deposit was:

(1) Rs.146,148/- (2) Rs.150,000/- (3) Rs.123,240/- (4) Rs.160,000/-

(03 marks)
1.4 In a class of 20 students, 4 of the 9 boys and 3 of the 11 girls are in the athletics team. The
team is chosen to take part in an athletic race on Sports Day.
If a student is selected at random in the class, the probability that the student chosen is a girl
given that she is a member of athletic team of the class would be:

 
(1) (2) (3) (4)
   
(03 marks)

1.5 You are given the following frequency distribution of students’ marks in a certain
examination:

Marks 0-9 10 - 19 20 - 29 30 - 39 40 - 49

No. of students 8 10 11 15 6

The mode of the marks is (approximately):

(1) 32.08 (2) 32.58 (3) 33.08 (4) 35.28

(03 marks)

1.6 For a given data set of x and y, the following summarized values were calculated for
5 observations:

6 = 61, 6 = 37, 6 = 527, 6  = 869, 6 

= 321

Based on the above data, the correlation co-efficient between “x” and “y” would be:

(1) -0.99 (2) 0.98 (3) 0.97 (4) 0.96

(03 marks)

1.7 The prices of three brands of organic fertilizer manufactured by a company in 2021 and
2022 are tabulated below:
Brand Price in Rs. (2021) Price in Rs. (2022)

A 15 18

B 18 22

C 24 28

The price relative of brand C fertilizer, considering 2021 as the base year is (to the nearest
integer):

(1) 86% (2) 150% (3) 111% (4) 117%

(03 marks)

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1.8 In a family, the probability for husband to win a lottery ticket is and the probability for


wife to win is . The probability that both the husband and the wife will win this lottery

ticket would be:




(1) (2) (3) (4)
   
(03 marks)

1.9 Monthly sales figures recorded by a photocopy paper supplier between 2015 and 2022
were used to determine the following seasonal indices for 2023, assuming a multiplicative
time series model:

Month Jan. Feb. Mar. April May June July Aug. Sep. Oct. Nov. Dec.
Seasonal
1.12 0.88 0.95 1.05 0.92 0.98 0.86 1.06 1.02 0.97 1.03 1.16
Index

The estimated trend value for the month of August in 2023 was 10,265. The forecasted
sales for August 2023 would be (to the nearest integer):

(1) 10,881 (2) 9,684 (3) 10,263 (4) 12,266

(03 marks)

1.10 Soysa invested Rs.500,000/- in a fixed deposit of bank for 3 years at the interest rate of
18% compounded annually. The maturity value of the fixed deposit at the end of 3rd year
would be:

(1) Rs.821,516/- (2) Rs.696,200/- (3) Rs.864,000/- (4) Rs.770,000/-

(03 marks)

Write the answers for question No. 1.11 to 1.13 in your answer booklet with the number assigned
to the question.

1.11 Relate the terms given on the left hand side of the following table with the number of the
appropriate explanation given on the right hand side:

Term Explanation
(1) Averages are calculated by moving from one
(A) Trend
overlapping set of values to the next.
(2) Giving weight of the current year to calculate the
(B) Multiplicative Model
price index.
(3) It is assumed that time series variable is the product
(C) Paasche’s Price Index
of four components.
(D) Moving Averages (4) The direction in which the time series in the long run.

(01 mark each, 04 marks)

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1.12 There are 240 students in an educational institute. The following pie chart shows the
number of students of the 4 subjects studied in the institute:

Computing Biology
30% 28%

Chemistry
Mathematics 19%
23%

Find the number of students who are not studying computing. (02 marks)

1.13 Find the sum of the first 12 terms of the following arithmetic series:

-7, -1, 5, …………….. (02 marks)

State whether each of the following statements (1.14 and 1.15) is True or False. Write the answer
(True/False) in your answer booklet with the number assigned to the question:

1.14 In a regression analysis used to study the relationship between advertising cost and sales
income of a firm, sales income should be considered as the independent variable. (01 mark)

1.15 An annuity is an arrangement by which a person receives / pays a series of constant

annual amounts. (01 mark)
(Total 40 marks)
End of Section A

SECTION B
(Total 40 marks)

Question 02

(a) A company has categorized its employees as experienced staff and newcomers. The
company is planning to distribute year-end bonuses to its employees such that every new
employee gets Rs.50,000/- each and every experienced employee gets Rs.125,000/- each.
The company spends Rs.3,875,000/- as the bonus to share among 40 employees.

You are required to:

Calculate the number of newcomers and experienced staff in this company. (04 marks)

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(b) In a manufacturing company, the proportion of employees using public transport is of

the total of 350 employees. The company is planning to start a staff transport service for
those who are using public transport.

You are required to:

Calculate the number of buses to be allocated, if only 50 employees can be accommodated

in one bus. (03 marks)

(c) A telecommunication provider estimates that its annual profit will go down by 4% in 2023
due to an increase in maintenance charges.

You are required to:

Calculate the expected profit for 2023 if the company has made a profit of Rs.20,000,000/-
in 2022. (03 marks)
(Total 10 marks)

Question 03

The Total Cost function per month of a firm is given by TC = 2q + 2q + 5,600 and the demand
function per month is given by P = 30 + 2.
(Where q is the number of units produced during the month.)

You are required to:

(a) Identify the Total Revenue (TR) function of the firm. (03 marks)

(b) Calculate the Break-Even Quantity. (04 marks)

(c) Calculate the Marginal Cost (MC) of the firm when the firm produces 250 units. (03 marks)
(Total 10 marks)

Question 04
A sample of 8 patients were examined regarding their age and blood sugar level. The data are
summarized in the following table:
Age (x) 18 25 30 36 40 50 60 65

Blood sugar
85 90 96 100 110 115 125 140
level (y)

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Using the above data:

You are required to:

(a) Identify the least square regression line given by y = a + bx to represent the relationship
between the age of a patient and the blood sugar level. (07 marks)

(b) Calculate the expected blood sugar level of a patient, if the age is 72. (03 marks)
(Total 10 marks)

Question 05
The following table shows the number of workers at a government office and their ages collected
from last year records of that office:

Age 20 – 29 30 – 39 40 – 49 50 – 59 60 – 69

No. of workers (f) 10 18 30 45 17

Using the above data,

You are required to:

(a) Calculate the following for age of workers:

(i) Median. (04 marks)

(ii) Mean. (03 marks)

(b) Calculate the coefficient of skewness, if the standard deviation of above data is 11.42.
(03 marks)
(Total 10 marks)
End of Section B

SECTION C
(Total 20 marks)

Question 06

(A) Kasun is looking for a loan scheme that supports his higher studies. He comes across a
bank from which he can obtain a loan of Rs.800,000/- at an interest rate of 9% per annum.

You are required to:

Calculate the annual installment of the loan if it is to be settled in 5 years. (03 marks)

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(B) A project manager evaluates two (2) projects as Project P and Project Q. Initial cost and
annual net cash flows of two (2) projects are given in the following table:

Year 0 1 2 3
Project (Rs.) (Rs.) (Rs.) (Rs.)
P (450,000) 250,000 200,000 125,000

Q (400,000) 250,000 200,000 75,000

The cost of capital (discount factor) of the company is 10% per annum.

You are required to:

(a) Calculate the Net Present Value (NPV) of each project. (06 marks)

(b) Identify the best investment option with reasons based on the NPV. (02 marks)

(C) The employees of a company are classified as management, office, and operations. The
following table shows the number of employees in each category and whether they are
married or not:
Employement
Married Unmarried
Category
Management 06 14
Office 25 10
Operations 45 30

If an employee is chosen at random:

You are required to:

(a) Calculate the probability that the employee is married given that the employee
belongs to operations category. (02 marks)

(b) Calculate the probability that the employee is from management category of the
company. (03 marks)

(D) A coffee maker fills jars with coffee. The volume of a coffee jar can be modelled by a normal
distribution with a mean of 232ml and a standard deviation of 5ml.

You are required to:

Calculate the probability that the volume of a randomly selected jar is less than 225ml.
(04 marks)
(Total 20 marks)
End of Section C

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 ACTION VERBS CHECK LIST
Level of
Description Action Verbs Verb Definitions
Competency
Draw Produce a picture or diagram.
Relate Establish logical or causal connections.
Recall Facts
Knowledge (1)
and Basic State Express details definitely or clearly.
Concepts.
Identify Recognize, establish or select after consideration.
List Write the connected items.

Level of
Description Action Verbs Verb Definitions
Competency
Show validity or otherwise, using knowledge or
Recognize
contextual experience.
Explain &
Comprehension Elucidates Interpret Translate into understandable or familiar terms.
(2) Ideas and Describe Write and communicate the key features.
Information.
Explain Make a clear description in detail using relevant facts.
Define Give the exact nature, scope or meaning.

Level of
Description Action Verbs Verb Definitions
Competency
Reconcile Make consistent / compatible with another.
Graph Represent by graphs.
Assess Determine the value, nature, ability or quality.
Use and Adapt
Application (3) Solve Find solutions through calculations and/or explanation.
Knowledge in
New Prepare Make or get ready for a particular purpose.
Situations.
Demonstrate Prove or exhibit with examples.
Calculate Ascertain or reckon with mathematical computation.
Apply Put to practical use.

Level of
Description Action Verbs Verb Definitions
Competency
Communicate Share or exchange information.
Outline Make a summary of significant features.
Draw Contrast Examine to show differences.
Analysis (4) Connections
Among Ideas Compare Examine to discover similarities.
and Solve
Problems. Discuss Examine in detail by arguments.
Differentiate Constitute a difference that distinguishes something.
Analyze Examine in details to find the solution or outcome.

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 FORMULAE SHEETS
Mathematical Fundamentals: Numerical Descriptive Measures:
Quadratic equation: Mean ̅ :
∑=
The solutions of a quadratic equation, For ungrouped data:
"  +  + # = 0 is given by ,
∑ >=
− ± √ − 4"#
For grouped data:
∑>
=
2" Median:

Arithmetic sequence: For Ungrouped data Md = (n + 1)th term

2
Term of an arithmetic sequence:
n - Fc
Tn = a + (n - 1) d For Grouped data Md = L1 + 2 XC
fm
The sum of first n terms of an AP:
, Mode:
$= 
{ 2" + (' − 1)/} ∆@
Grouped data M0 = L1 + XC
∆@ 6 ∆A

Standard deviation B:
Geometric sequence:
The term of a geometric sequence,
For ungrouped data:
Tn = arn-1
∑(=2 =̅ )A ∑ =A
The sum of first n terms of a GP: ; or ; − ̅ 
, ,
{0 1 2 }
$=" if (>1
{02} For grouped data:

∑ >(=2 =̅ )A ∑ >= A
$="
{201 }
{20}
if (<1 ; ∑>
or ; ∑>
− ̅ 

$ = '" Otherwise (=1

Coefficient of variation (CV):
CDE,FE0F FGHIEDIJ, L
Quantitative Finance:
= x 100
KGE, =̅
Simple interest:
$ = % (1 + '() 3(Mean - Median)
Coefficient of skewness =
Standard Deviation
Compound Interest:
$ = % {1 + (}, Comparing Two Quantitative Variables:

Discounting: Correlation coefficient (r):

 [' ∑  − ∑ ∑ ]
Present Value = Future Value ×
(60)1
;{[' ∑   − (∑ ) ] × [' ∑  
− (∑ ) ]}
Repayment of mortgage / Loan:
$. , (. − 1) Regression line under least square method (a and b):
-=
{. , − 1} [, ∑ =M 2 ∑ = ∑ M]
b=
Effective Interest Rate: [, ∑ = A –(∑ =)A ]

EIR = {(1 + (), − 1} 100% a = O − ̅

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 FORMULAE SHEETS (Continued)

Comparison over time with Economic variables Time Series:

Index Numbers: Multiplicative Model

P@
Price Relative = PQ
× 100 Y= T ×S ×C × R
R@
Quantity Relative = × 100 Sets and Probability
RQ

Value Relative V/ =

∑ P@ R@
× 100 ∪ - Union; A∪B defines all elements in A
∑ PQ RQ
plus all elements in B, no element being
∑ P@
Simple aggregate price index = ∑ PQ
× 100 counted twice.

Simple aggregate quantity index =

∑ R@
× 100
∩ - Intersection; A∩B defines all elements
∑ RQ
included in both A and B.
 P
Average price relative = , ∑ P@ × 100 P (A) – Probability of event A
Q
P (A/B) – Probability of event A, given B
 R
Average quantity relative = , ∑ R@ × 100
Q General rules:
P (A∪B) = P (A) + P (B) – P (A∩B)
Weighted aggregate indices
1) Base-weighted / Laspeyre’s: `(a∩b)
P (A/B) =
Price index
∑P R
= ∑ P@ RQ × 100 `(b)
Q Q
Expectation and Variance of a discrete
∑ R@ PQ
Quantity index =∑ × 100 random variable:
RQ PQ

2) Current-weighted / Paasche’s: c(%) = ∑(d(e"fgfh × d" eii) = ∑d × 

∑ P@ R@
Price index = ∑ PQ R@
× 100
j-.(%) = ∑ d  − (∑ d)
∑R P
Quantity index = ∑ R@ P@ × 100
Q @ Normal Distribution:
− ]
\=
3) Using standard weights
Price index =
∑ P@ U
× 100 B
∑ PQ U

∑R U
Quantity index = ∑ R@ U × 100
Q

Weighted average of relatives

∑[ U ×VW ]
Price index = × 100
∑U

∑[ U ×VX ]
Quantity index = × 100
∑U

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