PUBLIC ACCOUNTANTS EXAMINATIONS BOARD
A Committee of ICPAU
CPA(U) EXAMINATIONS
LEVEL ONE
QUANTITATIVE TECHNIQUES − PAPER 3
TUESDAY 20 MAY, 2025
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 8 – 16.
4. Write your answer to each question on a fresh page in your answer
booklet.
5. Please, read further instructions on the answer booklet, before attempting
any question.
© 2025 Public Accountants Examinations Board
Quantitative techniques − Paper 3
Attempt five of the six questions
Question 1
(a) Write a short explanatory note on the stratified sampling technique and
give three advantages of the technique.
(4 marks)
(b) Tactic is an electronics company dealing in computer hardware. Of late,
customers have complained about the life time (time to blow out) of
company computer fuses. The table below shows a frequency distribution
of the life time of 210 fuses during a testing phase.
Life time (hours) No. of fuses
1.00 - 1.50 2
1.50 - 2.00 8
2.00 - 2.50 22
2.50 - 3.00 43
3.00 - 3.50 66
3.50 - 4.00 42
4.00 - 4.50 18
4.50 - 5.00 6
5.00 - 5.50 3
Required:
Using the frequency table above;
(i) Construct a frequency polygon and comment about the distribution.
(5 marks)
(ii) Calculate the mode and mean time of the distribution (6 marks)
(iii) Determine the standard deviation of the distribution. (3 marks)
(iv) Determine the nature of the skewness of the distribution using Karl
Pearson formula. (2 marks)
(Total 20 marks)
Question 2
(a) Using practical examples, distinguish between independent and dependent
events as applied in probability theory.
(4 marks)
(b) Given that there are 20 machines in a factory and the probability of a
machine going out of order at any time during the day when the machine
is in use is 0.02:
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Quantitative techniques − Paper 3
Required:
(i) Using the Poisson distribution, find the probability that no machine
will go out of order at any time during the day. (3 marks)
(ii) Calculate the probability that exactly three machines will be out of
order on the same day by using both Poisson and binomial
distribution methods and state, with a reason, whether the Poisson
distribution is a good approximation for a binomial distribution.
(7 marks)
(c) An employee of a firm has an option to invest Shs 1,000,000 in the
company bond. At the end of one year, the company will buy back the
bond at a price determined by its profits. From past experience, the
company predicts it will buy the bond back at the following prices with
associated probabilities, where x is price paid for the bond.
0 500,000 1,000,000 1,500,000 2,000,000
0.01 0.22 0.30 0.22 0.25
Required:
(i) Determine the expected price paid for the bonds and expected profit
for the employee.
(3 marks)
(ii) Calculate the standard deviation for this probability distribution.
(3 marks)
(Total 20 marks)
Question 3
(a) Define the term ‘consumer price index’ and give any three uses of index
numbers in an economy.
(4 marks)
(b) The table below shows the prices (Shs ‘000’) and quantities (litres) of
petroleum products bought in the black market in the Mendon suburb of
Masaka city.
January 2021 January 2022 January 2023
Item Price Quantity Price Quantity Price Quantity
Diesel 350 100 400 90 520 130
Petrol 400 120 550 85 600 100
Engine oil 550 130 1400 95 2000 60
Required:
Calculate Laspeyre’s price indices for 2022 and 2023 using 2021 as a base
year. (4 marks)
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Quantitative techniques − Paper 3
(c) A tomatoes dealer at an outlet in Nakasero market claims that his
tomatoes take long before rotting. A sample of 100 tomatoes were tested
and the results obtained from the sample were a mean life of 97.1 hours
with a standard deviation of 6.6 hours.
Required:
On the basis of the sample above, calculate the 95% confidence limits for
the mean life of the tomatoes.
(5 marks)
(d) The table below shows the number of accidents that occur at a certain
hardcore and aggregates production center at Mukono Stone Quarry.
Day of the week No. of accidents
Monday 11
Tuesday 13
Wednesday 14
Thursday 13
Friday 15
Saturday 14
Sunday 18
Required:
Using Chi-square distribution at 5% level of significance, test whether
accidents occur uniformly over the week.
(7 marks)
(Total 20 marks)
Question 4
(a) (i) Explain the term utilisation as applied in queueing theory.
(2 marks)
(ii) State any two defining properties that are considered when
determining if the Poisson process is fit to model queueing
scenarios.
(2 marks)
(b) A software engineer carried out a study to establish the relationship
between age of registered students pursuing the CPA course and the time
spent on revision over the internet. The findings were recorded in the
following table (next page).
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Quantitative techniques − Paper 3
Student No. Age (years) Time (minutes)
C001 28 342
C002 50 125
C003 44 121
C004 32 256
C005 55 56
C006 60 225
C007 38 185
C008 22 141
C009 21 342
C010 45 169
C011 33 241
C012 33 241
C013 19 583
C014 17 394
C015 21 249
Required:
Compute the rank correlation coefficient and comment on the relationship.
(5 marks)
(c) The table below shows sales figures (Shs ‘000’) for different consecutive
months of the year 2022.
Month Amount
January 98
February 106
March 104
April 100
May 105
June 102
July 103
August 102
September 110
Required:
(i) Find the trend values for four monthly centered moving averages of
the sales figures. (4 marks)
(ii) Identify any three characteristics of moving averages as applied in
time series analysis. (3 marks)
(iii) Plot the sales and centered trend moving average values on the
same graph. (4 marks)
(Total 20 marks)
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Quantitative techniques − Paper 3
Question 5
(a) Distinguish between marginal cost and marginal revenue concepts.
(4 marks)
(b) The revenue gained from producing and selling x wooden baby toy cars
can be modeled by the equation .
Required:
Determine the number of wooden baby toy cars that must be produced
and sold in order to earn a revenue of Shs 42,500.
(4 marks)
(c) A production facility is capable of producing 60,000 pens per day and the
total cost of producing x pens in a day is given by a cost function,
Required:
Determine how many pens should be produced per day in order to
minimize production costs.
(4 marks)
(d) MPA-NKUWE is a quick buy and sale business deals in three commodities
named X, Y and Z whose prices are x, y and z per unit respectively. Abel,
Bonny and Cindy are main player in this business that involves buying and
selling commodities at pre-determined prices among themselves. On a 26 th
June 2023, Abel purchased 4 units of Z and sold 3 units of X and 5 units of
Y. Bonny purchased 3 units of Y and sold 2 units of X and 1 unit of Z while
Cindy purchased 1 unit of X and sold 4 units of Y and 6 units of Z. In this
deal, Abel, Bonny and Cindy earned Shs 6000, Shs 5000 and Shs 13000
respectively.
Required:
(i) Express this information as simultaneous equations.
(2 marks)
(ii) Hence, using any appropriate method, solve the simultaneous
equations above so as to find the price per unit of the three
commodities.
(6 marks)
(Total 20 marks)
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Quantitative techniques − Paper 3
Question 6
(a) Distinguish between a network diagram and a Gantt chart in project
planning.
(2 marks)
(b) The following table shows the precedence, designation activities and
activity duration of pseudo project.
Activity Designation Immediate Duration
predecessor (weeks)
A 1 - 2 None. 2
B 2 - 3 A 5
C 2 - 4 A 7
D 2 - 5 A 3
E 3 - 5 B 1
F 5 - 6 D, E 6
G 4 - 6 C 3
H 6 - 7 F, G 3
Required:
(i) Draw a scaled Gantt chart on a squared paper for the project.
(5 marks)
(ii) Determine the optimum duration for the project. (1 mark)
(b) Mr. Banks is a progressive farmer in Katakwi district with 150 acres of land
suitable for growing mangoes and oranges. The cost of cultivating
mangoes is Shs 40,000 per acre whereas the cost of cultivating oranges is
Shs 60,000 per acre. Banks has a maximum of Shs 7,400,000 for land
cultivation. Each acre of mangoes requires 20 hours of labour and each
acre of oranges requires 25 hours of labour. However, Banks has a
maximum of 3300 hours of labour available. He has also decided to
cultivate at least 70 acres of mangoes. If the season is good and he gets
bumper harvest, he expects to make a profit of Shs 150,000 from each
acre of mangoes and Shs 200,000 from each acre of oranges.
Required:
(i) Express the above information in terms of constraints.
(4 marks)
(ii) Determine the objective function for this project.
(1 mark)
(iii) Using the simplex tableau method, determine the optimal number
acres of each type of fruit that should be planted in order to reap
maximum profit. (7 marks)
(Total 20 marks)
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Quantitative techniques − Paper 3
Formulae and Tables
n!
Combination Cr
n
1.
(n r )!r!
n!
Permutations pr
n
2.
(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 n xy x y
8. =
correlation (n x 2 ( x) 2 ) (n y 2 ( y) 2 )
crash cost – normal cost
9. Cost slope
normal time – crash time
n
hm
10. Harmonic mean (ungrouped data): 1
x
11. Sample mean x
x
n
n
Harmonic mean (grouped hm
12. f
data): x
Quartile coefficient of Q3 Q1
13.
dispersion: Q3 Q1
Bowley’s coefficient of Q3 Q1 2Q2
14. =
skewness Q3 Q1
Mean x A fx
fd o
15. Mean x
f r f
1
16. Geometric mean GM Anti log
n
log10 x
N
Cfb
17. Median Lb 2 C
fm
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Quantitative techniques − Paper 3
d1
18. Mode lm C
d1 d 2
fx fx
2 2
19. Variance Var ( x)
f f
20. Standard deviation fx 2
x 2
f (x x) 2
f f
21. Sample standard deviation s
(x x) 2
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
Where c
x d y and d n xy2 x 2y
n n n y ( y )
x µ
24. Standardizing normal z
x x2
25. Central Limit theorem 12 2 2
n1 n2
s
26. Confidence interval for sample mean x t / 2
n
2 O E 2
27.
Chi- square E
pq
28. Confidence interval of proportion p z 2
n
3 x median
Pearson coefficient of ( x mode)
29. Sk or Sk
skewness sd sd
30. Expectation E X = xP( X x)
Laspeyres’ price index =
( p1 q 0 )
31. 100
(q 0 p0 )
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Quantitative techniques − Paper 3
Paasche’s Model =
( p1 q1 )
32. 100
(q 1 p0 )
Weighted aggregate price index
wv n
33. 100
wv 0
34. Additive law of probability; P ( A B ) P ( A ) P ( B ) P ( A B )
35. Conditional probability P A B
P( A B)
P(B)
36. Independence of A, B P A P ( A) orP ( A B ) P ( A) P ( B )
B
b(1 r)n b
37. Continuous compounding A P(1 r)
n
r
vu uv
1 1
38. Quotient rule of differentiation f 2 ; where f u
v v
x
39. PoissonModelP X x e
x!
x x1
40. Extrapolation y x y1 ( y 2 y1 )( )
x 2 x1
y y1
41. Interpolation y x y1 ( x x1 )( 2 )
x 2 x1
42. Mean control limits: , where A2=0.729
43. Range control limits: UCL = D4R & LCL= D3R, where D4 = 2.282 & D3 =0
44. Quadratic formula
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