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Cpa Section 4 Quantitative Analysis. Question Paper
Cpa Section 4 Quantitative Analysis.
Course:Cpa Part Ii
Institution: Pinnacle Business School question papers
Exam Year:2011
CPA PART II SEC 4
Quantitative Analysis
Illustrative Questions
Functions & Graphs & Linear Functions
Question 1
A book publisher determines that the manufacturing costs associated with each book due for publication is shs.500 and the fixed costs are shs. 700,000
Required
What is the breakeven point (in units and shillings) if each book sells for Shs. 700?
Question 2
A salesman's daily wages is composed of a fixed amount and a variable component which is dependent on the number of ice cream units sold. He finds that when he sells 10 units on a given day, he earns shs. 600 whereas when he doubles his sales his earnings increase by only shs. 100.
Required
a. Determine
i. Fixed daily earnings
ii. Level of commission per unit sold and hence
iii. What are the salesman's earnings if he sells 30 units?
b. On a given day the salesman is determined to earn shs. 3,500. Suppose on the previous day he had guaranteed orders of 20 units, how many more must he sell in order to achieve his target earnings?
Question 3
A certain commodity has linear demand and supply functions going through the following points.
i. When P= shs. 7,500 q= 1,000 units
P= shs. 4,625 q=750 units
ii. When P=shs. 2,525 q= 100 units
P= shs. 1,525 q= 200 units
Required
a. Obtain the linear function that goes through the points given in (i) and (ii) above and clearly explain which the supply is and which the demand function is. Assume this is a normal commodity
b. Explain what is meant by market equilibrium and obtain the same for the above. Indicate your results on a graphical sketch.
Question 4
Dala Transporters depreciate its fleet of trucks using a straight line method. The current accounting year is coming to an end and external auditors are examining the books of accounts. However they cannot get complete records concerning a truck which was acquired 3 years ago. Its current book value is shs. 1,800,000 while its purchase cost was shs. 4,200,000. This type of truck is usually disposed of after 5 years.
Required
a. Determine the linear function v=a+bt which relates the book value v and time in years t. Interpret a and b
b. What is the book value at the end of the 2nd year of the truck
c. Determine the disposal value of the truck stating any assumptions you may make.
Question 5
The manager of Uchukuzi Ltd must decide whether to hire a new van or buy one. If she hires a van from company A, she will have to pay a fixed cost of Shs. 300,000 per year, but nothing for mileage. Company B charges purely on a mileage basis at a rate of Shs. 30 per mile. If she buys a van she estimates that she will incur a fixed cost of Shs. 150,000 per year plus a mileage cost of Shs. 12.50 per mile.
Required
What is the most economical decision the manager should make?
Question 6
The management of Biashara Company has approached you to study the relationship between its sales and costs. The sales, total cost and profit for the company during two successive years were as follows:
Year 1
Sales- shs. 200,000
Total cost- Shs. 160,000
Profit- Shs. 40,000
Year 2
Sales- shs. 300,000
Total cost- shs. 220,000
Profit- shs. 80,000
fixed costs are the same over the two years
Required
a. Determine the fixed costs
b. Determine the break even production in shillings;
Calculate the profit if total variable costs incurred were Shs. 240,000
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