CPA › Quantitative Analysis › December 2023

CPA Quantitative Analysis – December 2023 Past Paper & Answers

Unit: Quantitative Analysis

17 Questions

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Questions

Download CPA Quantitative Analysis December 2023 past paper with detailed answers and marking scheme. This paper is based on KASNEB examination standards and is ideal for revision and exam preparation.

Access the full paper online, download the PDF, or study offline. Each question includes step-by-step solutions to help you understand key concepts in Quantitative Analysis.

Other Quantitative Analysis Past Papers

1a
Mathematical Techniques - Descriptive Statistics
​​Highlight FOUR disadvantages of the mode as a measure of central tendency
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1b
Mathematical Techniques - Calculus
​ ​​Find the area between the curve y=x+2x+x21​ , the x axis and the lines x = 1 and x = 2.
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1c
Mathematical Techniques - Calculus
​ ​​Safi Limited manufactures and sells two types of cleaning pads; Osha and Oga. The demand functions for the two products are given by:
  • P1 = 1,200 – 2x – 5y
  • P2 = 1,700 – 3x – 2y
Where:
  • P1 is the unit price of Osha in shillings.
  • P2 is the unit price of Oga in shillings.
  • x is the number of units sold of Osha.
  • y is the number of units sold of Oga.
The total cost of producing both products is given by the function TC = 230x + 90y.

Required:

(i) The number of units of each product required to maximise total profit.

(ii) The maximum total profit.
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2a
Decision Theory
​​List SEVEN steps of the decision making process
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2b
Time series
​ ​ ​ ​​The following data shows the quarterly sales of cars for Excellent Auto Enterprises for a period of three years:

Sales (Sh.“million”)
Year
Quarter 1
Quarter 2
Quarter 3
Quarter 4
2020
25
20
18
30
2021
33
28
26
38
2022
41
37
34
46

Required: 

(i) The 4-quarter centred moving average trend values. 

(ii) The seasonal multiplicative indices. 

(iii) The deseasonalised sales for each quarter.

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3a
Mathematical Techniques - Matrix Algebra
​​Highlight FOUR applications of Markov chain analysis in business and finance.
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3b
Correlation and Regression Analysis
​ ​ ​ ​​An insurance company has 2 claim assessors who must each give approval to customers who wish to lodge a claim for compensation. The manager currently has 8 such customers and has asked each assessor to independently rank the customer claims in order of merit. The rankings are shown below:

Customer
A
B
C
D
E
F
G
H
Assessor 1 Ranking
4
6
2
1
5
8
6
3
Assessor 2 Ranking
4
8
1
3
7
4
6
2

Required: 

Calculate the rank correlation coefficient of the two sets of rankings and comment on the results
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3c
Hypothesis Testing and Estimation
​ ​​The Revenue Authority Research Department conducted a survey that revealed the number of companies that were reported as being tax compliant in the last six months of the year 2022 as recorded in the table below:

Month
July
August
September
October
November
December
Number of Companies
326
290
306
260
355
365

Required: 

Test the hypothesis that the number of tax compliant companies does not depend on the month of the year at a 1% significance level.
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4a
Mathematical Techniques
​ ​​An economy is based on 2 sectors; Agriculture and Manufacturing. Production of a shilling worth of Agriculture requires an input of 0.3 from the Agriculture sector and 0.1 from the Manufacturing sector.

Production of a shilling worth of manufacturing requires an input of 0.2 from the Agriculture sector and 0.4 from the Manufacturing sector.

Required:

Find the output from each sector that is needed to satisfy a final demand of Sh.12 billion for Agriculture and Sh.8 billion for Manufacturing.

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4b
Decision Theory
​ ​ ​​Consider the following data for 120 students of a College concerning the languages they are studying namely;
French, German and Russian.

  • 15 students study Russian and German.
  • 58 students study German or French but not Russian.
  • 28 students study French only.
  • 90 students study French or German.
  • 20 students study French and Russian.
  • 44 students study at least two of the three languages.
  • 20 students do not study any of the three languages.

Required:

(i) Present the above information in a Venn diagram. 

(ii) Number of students who study all the three languages. 

(iii) Proportion of students who study French.

(iv) Number of students who study at least one language.
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5a
Decision Theory
​ ​​Explain the terms “minimax criterion” and “maximax criterion” as used in decision analysis.
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5b
Probability
​ ​ ​​Viwanda Ltd. produces light bulbs that are packed into boxes of 100. The company’s quality control department indicates that 0.5% of the light bulbs produced are defective.

Required:

(i) The percentage of boxes that will contain no defective light bulbs.

(ii) The percentage of boxes that will contain two or more defective light bulbs
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5c
Correlation and Regression Analysis
​ ​ ​​An accountant wishes to undertake a cost analysis of the annual repair cost for a popular model of a machine as influenced by the age of the machine. The results obtained are shown below:

Age (years)
Repair cost (Sh.“000”)
1
70
3
140
5
230
8
350
7
300
12
570
8
350
4
200

Required: 

(i) Pearson’s coefficient of correlation between the age of the machine and the repair cost. Interpret your result. 

(ii) Fit a least squares regression line of repair cost on age of machine to the data. 

(iii) Interpret the meaning of regression coefficients a and b in the least squares regression line obtained in (c) (ii) above. 

(iv) The coefficient of determination. Interpret your result. 

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6a
Mathematical Techniques
​ ​​​​Explain FOUR limitations of quantitative analysis.
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6b
Mathematical Techniques - Descriptive Statistics
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​​The amount of money spent on purchases by the first 50 customers at a large department store is summarised in the following table:

Amount spent (Sh.“000”) 
Number of customers
0 – 5
3
5 – 10
6
10 - 15
7
15 - 20
11
20 - 25
15
25 - 30
8

Required: 

Compute: 

(i) The mean amount spent by the 50 customers. 

(ii) The standard deviation of the amount spent by the 50 customers. 

(iii) The coefficient of variation of the amount spent by the 50 customers.

(iv) The coefficient of Kurtosis and comment on your answer.
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7a
Hypothesis Testing and Estimation
​ ​Explain the following terms as used in statistics: 

(i) Sample statistic. 

(ii) Population parameter.

(iii) Sampling distribution.
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7b
Linear programming
​ ​ ​ ​ ​ ​ ​​A manufacturer of dresses makes two types of dresses; Standard and Executive. Each Standard dress requires 10 labour hours from the cutting department and 30 labour hours from the sewing department. Each Executive dress requires 20 labour hours from the cutting department and 40 labour hours from the sewing department. The maximum labour hours available in the cutting department and the sewing department are 320 and 540 respectively. The company makes a profit of Sh.500 on each Standard dress and Sh.800 on each Executive dress. 

Required: 

(i) Formulate a mathematical model for the above linear programming problem. 

(ii) Using the simplex method, determine the number of Standard and Executive dresses that should be produced in order to maximise profit.
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