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- Advanced Business Calculations Level 3/series 4-2009
- Business Statistics/Series-2-2011(Code3009)
- Business Statistics Level 3/series 4-2009
- Business Statistics Level 3/Series 4 2008 (3009)
- Accounting Level 3/series 4-2009
- Business Statistics Level 3/Series 2 2008 (Code 3009)
- Business Statistics/Series-4-2010(Code-3009)
- Business Statstics/Series-4-2011(Code3009)
- Accounting/Series-4-2011(Code30124)
- Cost Accounting Level 3/series 2-2009
- Business Statistics/Series-3-2010(Code3009)
- Advanced Business Calculations/Series-4-2011(Code3003)
- Accounting(IAS)/Series-4-2011(Code3902)
- Advanced Business Calculation/Series-4-2007(Code3003)
- Advanced Business Calculations/Series-3-2011(Code3003)
- Cost Accounting/Series-3-2007(Code3016)
- Advanced Business Calculations/Series-2-2004 (Code3003)
- Business Statistics Level 3/Series 3 2008 (Code 3009)
- ABC Level 3 Series 4 2008
- Cost Accounting Level 3/Series 4 2008 (3016)

You are on page 1of 20

Business Statistics

Level 3

Model Answers

Series 3 2009 (3009)

information Email. enquiries@ediplc.com

contact us: www.lcci.org.uk

Business Statistics Level 3

Series 3 2009

Model Answers have been developed by EDI to offer additional information and guidance to Centres,

teachers and candidates as they prepare for LCCI International Qualifications. The contents of this

booklet are divided into 3 elements:

(2) Model Answers – summary of the main points that the Chief Examiner expected to

see in the answers to each question in the examination paper,

plus a fully worked example or sample answer (where applicable)

questions or to examination technique

Teachers and candidates should find this booklet an invaluable teaching tool and an aid to success.

EDI provides Model Answers to help candidates gain a general understanding of the standard

required. The general standard of model answers is one that would achieve a Distinction grade. EDI

accepts that candidates may offer other answers that could be equally valid.

All rights reserved; no part of this publication may be reproduced, stored in a retrieval system or

transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise

without prior written permission of the Publisher. The book may not be lent, resold, hired out or

otherwise disposed of by way of trade in any form of binding or cover, other than that in which it is

published, without the prior consent of the Publisher.

Page 1 of 18

QUESTION 1

An engineering company polls its staff to investigate the proportion of them who wish to move to flexible

working arrangements. For the two factories that it operates the results are: Western factory 175 out of

500 staff voted in favour and Northern factory 110 from 300 staff voted in favour.

(a) Test whether there is a significant difference between the Western and Northern factories in the

proportion of workers voting in favour of the flexible working arrangements.

(12 marks)

(b) Test whether the opinions of the engineering company’s employees, when the results of the two

factories have been combined, differ from the national figure.

(8 marks)

(Total 20 marks)

3009/3/09/MA Page 2 of 18

MODEL ANSWER TO QUESTION 1

(a) Null hypothesis: There is no difference in the proportion wanting flexible working hours in

the Western and Northern factories.

Alternative hypothesis: There is a difference in the proportion wanting flexible working hours in

the Western and Northern factories.

Polled value of p = = = 0.356

500 + 300 800

z= = = 0.477

1 1 0.229(0.00533 )

0.356 (1 − 0.356 ) +

500 300

significance level. There is no difference in the proportion of employees in favour of the

new flexible working arrangements at the two factories.

(b) Null hypothesis: There is no difference between the company proportion and the national

proportion.

Alternative hypothesis: There is a difference between the company proportion and the

national proportion.

Critical z = ±1.96/2.58

p −π 0.356 − 0.33

z= =

π (1 − π ) 0.33(1 − 0.33)

n 800

0.026 0.026

= z= =1.56

0.000276 0.0167

Conclusion: There is insufficient evidence to reject the null hypothesis. There is no difference

between the company proportion and the national proportion.

3009/3/09/MA Page 3 of 18

QUESTION 2

(4 marks)

(b) A factory that manufactures microwave cooker casings has a three stage production process;

cutting, forming and painting. Assume the times for each process are independently normally

distributed as follows:

(ii) take more than 36 seconds to produce.

(5 marks)

For a complete casing, calculate the proportion of items that are produced:

(iv) between 70 seconds and 80 seconds.

(11 marks)

(Total 20 marks)

3009/3/09/MA Page 4 of 18

MODEL ANSWER TO QUESTION 2

(a) As the basis for hypothesis testing, quality control or estimation of probabilities of a sales or

product failure.

x−x 48 − 40

(b) (i) More than 48 seconds z= = = 1.6

sd 5

x−x 36 − 40

(ii) More than 36 seconds z = = = - 0.8

sd 5

= x 1+ 2+3 = x 1 + x 2 + x 3 = 16 + 20 + 40 = 76

sd1 + sd 2 + sd 3 = 2 +3 +5 = 38 = 6.16

2 2 2 2 2 2

Joint Standard deviation =

Under 60 seconds

x−x 60 − 76 − 16

z= = = = −2.60

sd 6.16 6.16

x−x 70 − 76 -6

z= = = = −0.97(1.0)

sd 6.16 6.16

x−x 80 − 76 4

z= = = = 0.649(0.65 /0.6)

sd 6.16 6.16

= 0.242 (0.226)

3009/3/09/MA Page 5 of 18

QUESTION 3

A random sample of 12 operatives are tested for speed in completing a simple assembly task and a

comparison is made with their age.

Employee a b c d e f g h i j k l

Age (years) 18 24 17 17 19 21 26 17 18 26 31 29

Speed 9 16 4 3 8 15 19 4 5 17 8 19

(seconds)

(10 marks)

(b) Test whether the correlation coefficient found in part (a) differs significantly from zero.

(6 marks)

(4 marks)

(Total 20 marks)

3009/3/09/MA Page 6 of 18

MODEL ANSWER TO QUESTION 3

2 2

(a) Age x Speed y x y xy

18 9 324 81 162

24 16 576 256 384

17 4 289 16 68

17 3 289 9 51

19 8 361 64 152

21 15 441 225 315

26 19 676 361 494

17 4 289 16 68

18 5 324 25 90

26 17 676 289 442

31 8 961 64 248

29 19 841 361 551

263 127 6047 1767 3025

2 2

Σx Σy Σx Σy Σxy

n ∑ xy − (∑ x )(∑ y )

r=

(n∑ x 2

− (∑ x )

2

)(n∑ y 2

− (∑ y )

2

)

12 × 3025 − 263 × 127

r=

(12 × 6047 − 263 )(12 × 1767 − 127 )

2 2

2899

r= = 0.698 (0.7)

3395 x 5075

(b) Null hypothesis: The correlation coefficient does not differ significantly from zero.

Alternative hypothesis: The correlation coefficient does differ significantly from zero.

Degrees of freedom = n - 2 = 12 - 2 = 10

Critical value of t0.05/0.01 = 2.23/3.17

r n−2 0.698 12 − 2

t= t= = 3.08

2 2

1− r 1 − (0.698)

Conclusions: The calculated value of t is greater than the critical t value at the 5% level, but not at

the 1% level. Reject the null hypothesis. There is some evidence the correlation coefficient

differs from zero.

2 2

(c) Coefficient of determination = r x 100% = 0.698 x 100% = 48.7% (49%)

48.7% (49%) of the change in speed is associated with the change in age (and/or vice versa).

3009/3/09/MA Page 7 of 18

QUESTION 4

(a) When would a paired t test be used instead of an independent two sample mean test?

(4 marks)

Two processes, A and C, are being evaluated. Eight randomly selected members of staff are asked to

produce 80 items by each process and the number of errors is recorded.

Member of staff 1 2 3 4 5 6 7 8

Process A errors 17 15 13 16 18 19 13 18

Process C errors 15 16 14 13 14 12 15 14

(b) Test whether there is a difference in the error rate between the two processes.

(12 marks)

(c) Distinguish between a type 1 and a type 2 error and identify which might have occurred in your

answer to (b).

(4 marks)

(Total 20 marks)

3009/3/09/MA Page 8 of 18

MODEL ANSWER TO QUESTION 4

(a) The paired t test would be used when there is some indication that the same items are being

compared, eg identical twins or the same people are being measured as in before and after tests.

Alternative hypothesis: There is a difference in the error rate.

Degrees of freedom = n - 1 = 8 - 1 = 7

Process

A

Process

B d d

2 (d − d )2

17 15 2 4 0

15 16 -1 1 9

13 14 -1 1 9

16 13 3 9 1

18 14 4 16 4

19 12 7 49 25

13 15 -2 4 16

18 14 4 16 4

16 100 68

∑d 16

d= = =2

n 8

2 2

∑d ∑d 100

− (2 )

2

sd = − = = 2.92

n n 8

d−0 2−0 2

t= = = t= = 1.81

sd n −1 2.92 8 −1 1.1

Conclusion: Accept the null hypothesis, there is no difference in the error rate.

(c) Type 1 error is the probability of rejecting the null hypothesis when it is true.

Type 2 error is the probability of accepting a false null hypothesis.

A Type 2 error may have occurred.

3009/3/09/MA Page 9 of 18

QUESTION 5

(a) When would each of the following models be used to analyse a time series?

(ii) Multiplicative model

(4 marks)

2006 147 139 163 152

2007 152 139 174 156

2008 155 143 182 160

2009 162 147

(b) Calculate the centred trend by the method of moving averages and hence the quarterly seasonal

factors.

(12 marks)

(4 marks)

(Total 20 marks)

3009/3/09/MA Page 10 of 18

MODEL ANSWER TO QUESTION 5

(a) The additive model is used when the seasonal variations are independent of the trend and

relatively stable.

The multiplicative model is used when the seasonal variations are proportional to the trend.

(b)

Sales Moving Moving Trend Differences

total 1 total 2

147

139

163 601 1207 150.875 12.125

152 606 1212 151.5 0.5

152 606 1223 152.875 -0.875

139 617 1238 154.75 -15.75

174 621 1245 155.625 18.375

156 624 1252 156.5 -0.5

155 628 1264 158 -3

143 636 1276 159.5 -16.5

182 640 1287 160.875 21.125

160 647 1298 162.25 -2.25

162 651

147

differences -0.875 -15.75 18.375 -0.5

-3 -16.5 21.125 -2.25

ASV -1.9375 -16.125 17.20833 -0.75

n-1 10 -1 9

Quarterly Sales = 168.55 – 1.94 = 166.61 or 168.55 – 1.9375 = 166.6125

3009/3/09/MA Page 11 of 18

QUESTION 6

(a) Explain the purposes of calculating a general price index such as the Retail Price Index.

(6 marks)

(b) A general price index number (1985 = 100) stood at 194.7 in 1996 when it was rebased

(1996 = 100). In January 2008, the value of the price index is 152.8 (1996 = 100).

(ii) What is the value of the index in January 2008 based on 1985 = 100?

(iii) If a wage of £40,000 is earned in January 2008 what was its value in 1985?

(9 marks)

(c) When a man retired at 60 years of age he drew a pension of £8,460 per annum and a general

price index stood at 162.6 (1990 = 100). Now at the age of 65 his pension will be increased to

take into account general price increases. The general price index now stands at 202.1

(1990 = 100). What will be the value of the increased pension?

(5 marks)

(Total 20 marks)

3009/3/09/MA Page 12 of 18

MODEL ANSWER TO QUESTION 6

(a) The purposes of calculating a general price index such as the Retail Price Index are to calculate

cost of living pay rises, to increase pension payments, to find a rate of inflation and to find ‘real’

income.

(b) (i) Rebasing the index means to create a new starting year for an index. This may involve

recalculating past values of the index which have an earlier base year.

(ii)

1985 100

1996 194.7 100

Jan 2008 152.8

Rebased value 194.7 x 152.8

100

= 297.5

(iii)

wage in Jan 2008 = 40,000

297.5

£13,445.38

(c)

old index value = 162.6

current index value = 202.1

162.6

1.243

£10,515.17

Alternative answer:

65 202.1 £x

x = 202.1 x 8,460

162.6

£10,515.17

3009/3/09/MA Page 13 of 18

QUESTION 7

A direct sales company records the ages of a random sample of customers against the source of the

advertisement which led to the sale.

Source of Advertisement

30 and under 50 80 135 35 20 270

50 & Over 70 145 35 30 280

Total 200 400 100 100 800

(a) Carry out a suitable statistical test to see if an association exist between age of customers and

the source of the advertisement.

(12 marks)

A previous survey had shown the customers to be derived from the four advertising sources as shown

in the table below:

28% 48 % 16% 8%

(b) Has the percentage of customers derived from the different advertising sources changed

significantly?

(8 marks)

(Total 20 marks)

3009/3/09/MA Page 14 of 18

MODEL ANSWER TO QUESTION 7

(a) Null hypothesis: There is no relationship between the age of customer and the source medium.

Alternative hypothesis: There is a relationship between customer age and source medium.

Critical χ = 12.59/16.81

2

Age Under 30 50 120 30 50 250

30 and 80 135 35 20 270

under 50

50 & over 70 145 35 30 280

200 400 100 100 800

freq 30< 50 67.5 135 33.75 33.75

50 & over 70 140 35 35

to chi

squared 2.315 0.000 0.046 5.602

0.000 0.179 0.000 0.714

Conclusion: Reject the null hypothesis, there is a strong relationship between age and source medium.

(b) Null hypothesis: There has been no change in the advertising source over time.

Alternative hypothesis: There has been a change in the advertising source over time.

28% 48 % 16% 8%

observed 200 400 100 100

Degree of freedom (n - 1) = (4 - 1) = 3

Critical χ = 7.81/11.34

2

Conclusion: Reject the null hypothesis, there has been a change in the advertising source.

3009/3/09/MA Page 15 of 18

QUESTION 8

(a) (i) Explain what is meant by simple random sampling. Give one advantage and one

disadvantage of this sampling technique.

(4 marks)

(ii) Explain what is meant by stratified random sampling. Give one advantage and one

disadvantage of this sampling technique.

(4 marks)

A research team have been discussing the relative merits of collecting information from the public by

postal enquiry, face to face interviews, or via the internet.

(b) Explain what is meant by these three terms and give two advantages and two disadvantages for

each collection method.

(12 marks)

(Total 20 marks)

3009/3/09/MA Page 16 of 18

MODEL ANSWER TO QUESTION 8

Each item has an equal chance of being chosen. All the population needs to be numbered. A

selection then has to be made using random numbers.

1 disadvantage: Needs a complete sampling frame. The sample may be geographically dispersed

and therefore costly to investigate.

Divides the population into groups by a common characteristic eg age, gender.

The strata chosen must be relevant to the outcome of the survey. A sample is taken from each

stratum. The sample is more representative of the population.

1 advantage: More representative of the population. Provides information on the individual strata.

Standard error is less than for a random sample.

More cost involved because of the need for more information on the strata.

The questionnaires are sent by post to all the sample; usually a reply paid envelope is included.

2 advantages from eg Cheapness. No interviewer bias. Can take a large sample. Replies can be

thought about. Can use a random sample.

Difficult to ask sequential questions. Questions must be kept simple.

Use an interviewer to ask the questions on the questionnaire.

2 advantages. High response rate. Interviewer can probe. Questionnaire can be complex. The

interviewer can add observations to the answers.

2 disadvantages: Cost. Interviewer bias. Failure to complete all the interviews. As multistage

design is often used, there is a larger standard error.

Internet surveys

Advantages: Cheap, quick, easy to remail, access to specialist population, advertising medium.

Disadvantages: Difficult to identify the sampling frame, self-selecting sample, internet access can

be limited.

3009/3/09/MA Page 17 of 18

LEVEL 3

3009/3/09/MA Page 18 of 18

EDI

International House

Siskin Parkway East

Middlemarch Business Park

Coventry CV3 4PE

UK

Fax. +44 (0) 2476 516505

Email. enquiries@ediplc.com

www.ediplc.com

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