THE PUBLIC ACCOUNTANTS’ EXAMINATIONS BOARD

A Committee of the Council of ICPAU

CPA(U) EXAMINATIONS

LEVEL ONE

QUANTITATIVE TECHNIQUES - PAPER 2

TUESDAY 13 DECEMBER, 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 – 14.
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) Distinguish between frequency density and relative frequency as applied in
frequency distributions of data.
(2 marks)
(b) In 2021, 50 workers participated in the survey on the time (in minutes)
they take to reach their places of work. The results obtained are shown in
the distribution below.
Time (minutes) No. of workers
5- 4
10 - 4
15 - 7
20 - 4
25 - 19
45 - 9
65 - 3

Required:
(i) Compute frequency density for the distribution.
(3 marks)
(ii) Construct a histogram for the distribution.
(3 marks)
(c) The frequency table below shows the weights of paper box files in one of
the accounts section offices at Kampala Capital City Authority.
Weight (grams) Number of files
60 – 80 22
80 – 100 38
100 – 120 45
120 – 140 25
140 – 160 20
160 – 180 40
180 – 200 28
Required:
Calculate the harmonic mean weight of the box files.
(7 marks)

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 Quantitative Techniques – Paper 2

(b) During the auditors’ conference, the facilitator of the conference arrived
before the scheduled time. He was requested to engage the members who
had already arrived. He then displayed the following numbers; 4, 5, 5, 0,
4, 5, and 3 on the screen and asked participants to study the numbers.
Required:
Determine how many numbers greater than 1,000,000 can be formed with
the digits displayed on the screen by the facilitator.
(5 marks)
(Total 20 marks)
Question 2
(a) A recent study demonstrated that only 20% of the people in Kiboga are
contented with the status of the roads in their district. If 20 people from
Kiboga are selected at random.
Required:
(i) Find the probability that more than 1 person are contented with the
status of the roads in the district.
(3 marks)
(ii) Of the 20 people, how many should we expect to be contented with
the status of the roads in the district?
(2 marks)
(iii) If 250 people from Kiboga are selected at random, using normal
distribution find the probability that 65 people or less are contented
with the status of the roads.
(5 marks)
(b) A discrete random variable X has the following probability distribution.
0 1 2 3 4 5 6 7
0 2
Required:
(i) Determine the value of
(4 marks)
(ii) The probability (3 < < 7).
(2 marks)

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 Quantitative Techniques – Paper 2

(c) An insurance company insured 2,000 boda-boda riders, 4,000 car drivers
and 6,000 truck drivers. The probabilities of an accident occurring
involving a boda-boda, car and truck driver are 0.01, 0.03 and 0.15
respectively. Given that there was an accident on a Monday morning.
Required:
Determine the probability that the person involved in the accident was a
boda-boda rider.
(4 marks)
(Total 20 marks)
Question 3
(a) With two examples for each, distinguish between primary data and
secondary data in sampling.
(4 marks)
(b) Two factories decided to reward their best performing employees via three
values (a) innovation (b) punctuality (c) team work. The first factory
decided to honor 2, 4 and 3 employees for the respective values with a
total prize money Shs 2,900,000.
The second factory decided to honor 5, 2 and 3 employees for the
respective values with a total prize money of Shs 3,050,000. If the three -
value prizes cost altogether was Shs 950,000.
Required:
Determine the cash prize that was attached to each of the three values.
(7 marks)
(c) A postmaster of a local post office in an urban area wishes to hire short
term employees during the peak period because of large volumes of mail
parcels and packages delivered. Because of limited office space and
budgetary conditions, the number of short-term employees must not
exceed 10. According to past experience, on average, a male employee
can handle 300 mail parcels and 80 packages per day while a female
employee can handle 400 mail parcels and 50 packages per day. The
postmaster believes that the daily volume of extra mail parcels and
packages will be at most 3400 and 680 respectively. A male employee is
paid Shs 2,250 and a female employee is paid Shs 2,000 per hour.

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 Quantitative Techniques – Paper 2

Required:
Using graphical method, determine how many male and female employees
should be hired to keep the pay roll at minimum.
(9 marks)
(Total 20 marks)
Question 4
(a) A project to be implemented by PQR local consultants consists of tasks A,
B, C, D, E, F, G and H inclusive. As shown in the precedence table with
normal time, crash time normal cost and crash costs.
Task Preceding Normal Crash Normal Crash cost
task time (days) time(days) Cost (Shs) (Shs)
A None 5 3 200 400
B None 4 4 100 100
C A 2 1 500 800
D B 1 1 50 50
E B 5 3 150 300
F B 5 4 300 350
G C, D 4 4 200 200
H F 3 2 300 500
Required:
(ii) Draw a logical network showing the forward and backward path.
(4 marks)
(ii) Determine all critical tasks.
(1 mark)
(iii) Based on cost slopes for each activity, explain why activity F should
be delayed for one day and determine the new critical path.
(4 marks)
(b) The accounts clerks at Abacus Credit Microfinance are responsible for
posting each transaction on the customer’s credit card. To guard against
errors and complaints, inspectors re - check the entries before the close of
a day’s work and record any discrepancies. A sample of eight clerks’ work
was checked for errors and other discrepancies. The checked work
revealed the data in the table below:

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 Quantitative Techniques – Paper 2

Clerk A B C D E F G H
No. of transactions 200 200 200 200 200 200 200 200
inspected
No. of discrepancies 4 6 6 2 15 4 4 9
Required:
Determine:
(i) The mean proportion of defective data entries.
(1 mark)
(ii) The upper and lower control proportion of defective entries.
(5 marks)
(iii) Construct a control chart for the proportion of defective entries
among the data and comment on the process of entering data at
Abacus Credit Microfinance.
(5 marks)
(Total 20 marks)
Question 5
(a) Explain the term cost of living index.
(1 mark).
(b) The table below shows items in a consumer budget for a family located in
lower estates in Katakwi town.
Item Weight % Cost at Cost at
base period current period
Food 35 150,000 145,000
Transport. 10 25,000 23,000
Clothing 20 75,000 65,000
Rent 15 30,000 30,000
Miscellaneous 20 40,000 40,000
Required:
(i) Construct the consumer price index number.
(5 marks)
(ii) Interpret the cost of living.
(1 mark)
(iii) Explain what an index number greater than 100 indicates to salary
and wage earners.
(1 mark)

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 Quantitative Techniques – Paper 2

(c) The research paper on “Crop improvement for upcoming farmers designed
for difficulty climates” provided the following data ( = crop duration in
days for quick maturing soya beans, = crop yield in tons).

92 92 96 100 102 102 106 106 121 143

1.7 2.3 1.9 2.0 1.5 1.7 1.6 1.8 1.0 0.3

Required:
(i) Obtain the linear equation illustrating the regression of on using
the least squares method.
(8 marks)
(ii) Compute the coefficient of correlation, by product moment method
and hence find the coefficient of determination.
(4 marks)
(Total 20 marks)
Question 6
(a) Define the term exponential smoothing in the context of time series
forecasting methods.
(2 marks)
(b) In a sampling survey, it was anticipated that the outcomes, K, L, M, N will
have probabilities respectively. Forty independent
repetitions of sampling results were obtained as follows:
Outcome K L M N
Frequency 11 14 5 10
If a chi - square goodness of fit test is used to test the hypothesis at a
significance level of 0.01 ( ),
Required:
(i) State the null and alternative hypotheses applicable in this test.
(1 mark)
(ii) Calculate the value of Chi - square statistic at and hence
determine the decision reached.
(7 marks)

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 Quantitative Techniques – Paper 2

(c) On a particular day at the stock exchange, D & N stock index (FTSE) opens
“Come and Buy” promotion with Shs 4,000 starting at 9.00 am. The value
(F) of FTSE at time t (hours) past 9:00 am is given by the equation
.
Required:
(i) Determine the value of FTSE at noon.
(2 marks)
(ii) Calculate the highest value of the index during the day to the
nearest shilling.
(7 marks)
(iii) At what time of the day is the highest stock value attained.
(1 mark)
(Total 20 marks)

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 Quantitative Techniques – Paper 2

n!
1. Combination n Cr 
(n  r )!r!
n!
2. Permutations n p r 
(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, r=
8. n  xy   x  y
( n  x 2  (  x ) 2 )  ( n  y 2  ( y ) 2 )
9. coefficient of determination = r2
crash cost – normal cost
10. Cost slope 
normal time – crash time

n
11. Harmonic mean (ungrouped data) hm 
1
x
12. Sample mean x
x
n

13. Harmonic mean (grouped data) hm 

f
f
x
Q3  Q1
14. Quartile coefficient of dispersion 
Q3  Q1
Q3  Q1  2Q2
15. Bowley’s coefficient of skeweness =
Q3 Q1

Mean x  A   Mean x  
fd fx
16. or
f f

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 Quantitative Techniques – Paper 2

N 
  Cfb 
17. Median  Lb   2 C
 fm 
 
 
 d1 
18. Mode  lm   C
 d1  d 2 
2 2

Variance Var ( x )  
fx   fx 
19.  
 
f   f 
2 2

20. Standard deviation  

 fx x 2 
 f (x  x)
f f
2
21. Sample standard deviation s
(x  x)
n 1
22. 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 2   x 
2
n n
23. 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
24. Standardising normal. z


z
 
x 1  x 2 u1  u 2 
25. Central Limit theorem  12  22

n1 n 2
s
26. Confidence interval for sample mean  x  t / 2
n

27. Chi square,    2 O  E 2

E
pq
28. Confidence interval of proportion  p  z 2
n

29. Proportion control limits = , where is the mean proportion

 
( x  mode ) o 3 x  median
30. Pearson coefficient of skewness Sk 
sd r Sk   
sd

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 Quantitative Techniques – Paper 2

31. Expectation =  xP( X  x)

Laspeyres’ price index = 

( p1  q0 )
32.  100
 (q 0  p0 )

33. Paasche’s Model =

 ( p  q )  100
1 1

 (q  p )
1 0

34. Consumer price index =

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

P( A  B)
36. Conditional probability P A B 
P( B)
 

37.  
Independence of A, B P A B  P( A)orP( A  B )  P( A)  P( B)

b(1  r ) n  b
38. Continuous compounding A  P(1  r ) n 
r
1 1
vu  uv u
39. Quotient rule of differentiation f  2
; where f 
v v
x

40. PoissonModelP X  x   e 
x!
Extrapolation
41. x  x1
y x  y1  ( y 2  y1 )( )
x 2  x1
Interpolation
42. y 2  y1
y x  y1  ( x  x1 )( )
x 2  x1

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 Quantitative Techniques – Paper 2

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 Quantitative Techniques – Paper 2

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 Quantitative Techniques – Paper 2

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