26 STUDY MATERIAL C3

1.17 Summary
BASIC MATHEMATICS

Basic mathematics covers a wide range of topics and underlies virtually all the elements of
business mathematics. The key contents of the chapter are:
● the rules for the order of mathematical operations and the use of brackets – a source of
many errors in calculations;
● dealing with negative numbers;
● rounding to the nearest number or to various numbers of decimal places or significant
figures;
● dealing with powers and roots;
● manipulating formulae;
● dealing with exponential numbers;
● solving equations;
● manipulating inequalities;
● dealing with percentages and ratios;
● rounding errors;
● creating graphs in a excel to draw linear and quadratic equations and graph of a
hyperbola.
Revision Questions
1
Part 1.1 Objective testing selection

Questions 1.1.11.1.10 are standard multiple-choice questions with exactly

one correct answer each. Thereafter, the style of question will vary.

1.1.1 A square-ended rectangular box has a volume of 1,458 cm3. The length of the box
is twice that of one side of the square end.
One side of the square end therefore measures:
(A) 6 cm
(B) 9 cm
(C) 18 cm
(D) 24 cm.
1.1.2 The expression (x2)3/x5 equals:
(A) 0
(B) 1
(C) x
(D) x2.
1.1.3 A buyer purchases twenty cases of Product A at £7.84 per case, ten cases of Product
B at £8.20 per case, twelve cases of Product C at £8.50 per case and a number of
cases of Product D at £8.60 per case. He spends £469.80 in total. If there are twelve
items in each case of Product D, how many items of Product D does he buy?
(A) 120
(B) 144
(C) 150
(D) 180.
1.1.4 A person pays no tax on the first £3,500 of earnings and then 23 per cent tax on
the remainder of earnings. If he/she wishes to have £15,000 net of tax earnings,
what gross earnings (to the nearest £) does he/she need?
(A) £15,000
(B) £18,435
(C) £18,500
(D) £19,481.

27
28 REVISION QUESTIONS C3

1.1.5 An item priced at £90.68, including local sales tax at 19 per cent, is reduced in a
BASIC MATHEMATICS

sale by 20 per cent. The new price before sales tax is added is:
(A) £60.96
(B) £72.54
(C) £75.57
(D) £76.20.
1.1.6 The term x 1 equals:
(A) 2x
(B) 1/x
(C) x2
(D) x  1.
1.1.7 A buyer has spent £30,151 on 550 units of a particular item. The first 100
units cost £50 each, the next 150 units cost £8,250 in total, the next batch cost
£11,200 in total and the final 100 cost £x each. The value of x is:
(A) £55
(B) £56
(C) £57.01
(D) £60.30.
1.1.8 At a value added tax (VAT) rate of 12.5 per cent, an article sells for 84p, includ-
ing VAT. If the VAT rate increases to 17.5 per cent, the new selling price, to the
nearest penny, will be:
(A) 87p
(B) 88p
(C) 94p
(D) 99p.
1.1.9 In the following formula substitute Q  100, C  10, P  6 and R  0.2
2 DC
Q
PR
D, to the nearest unit, is:
(A) 598
(B) 599
(C) 600
(D) 601.
1.1.10 The price, £p, of a product is planned to be £10, the planned annual demand,
q, is 1,000 units and the number of trading days per year, n, is 200. If p, q and n
are expected to vary by 10 per cent, then the maximum value of pq/n, the mean
revenue per trading day, will be closest to:
(A) £37
(B) £50
(C) £55
(D) £67.
 FUNDAMENTALS OF BUSINESS MATHEMATICS 29

1.1.11 If a number P is increased by 5 per cent, what will its new value be? Which of the

BASIC MATHEMATICS
following answers is/are correct?
(A) P  5P/100
(B) 1.05P
(C) 0.95P
(D) 0.05P.
1.1.12 The number 268.984 is to be rounded. In each case write the correct answer, to
the accuracy specified.
(A) to two decimal places.
(B) to one decimal place.
(C) to the nearest whole number.
(D) to the nearest 100.
(E) to three significant figures.
(F) to four significant figures.
1.1.13 Evaluate the following without rounding.
(A) 725
(B) (5  2)  8
(C) 28 – 48/4
(D) (7  3)/5
(E) 8452
(F) (8  4)  (3  7).
1.1.14 Each of the following has been algebraically simplified. Which of the answers
given are correct, and which incorrect?
(A) ((a6)2)/a8 Answer: a4
(B) (a6)/a 5 Answer: a
(C) (a8)1/4 Answer: a2
(D) 1/a 7 Answer: a 6
1.1.15 The formula V  P  (1  r)n occurs in compounding.
(a) Rearrange the formula to make r the subject. Which one of the following
answers is correct?
(A) r  (V/P  1)1/n
(B) r  (V/P)1/n  1
(C) r  (V  P)/n  1
(b) If P  250, r  0.04 and n  6, calculate V to the nearest whole number.
1.1.16 The equation 60/Y  25/(20  Y ) is to be solved to find Y correct to one deci-
mal place. A solution comprises the following five lines, (A)(E). Which of the
lines (A)(E) follows correctly from the line immediately prior to them (regard-
less of whether or not you believe the prior line to be correct)?
(A) 60(20  Y )  25Y
(B) 1,200  Y  25Y
(C) 1,200  26Y
30 REVISION QUESTIONS C3

(D) Y  1,200/26
BASIC MATHEMATICS

(E) Y  46.15 to two d.p.

1.1.17 Each of the following solutions of quadratic equations contains one line that does
not follow correctly from that immediately prior to it. In each case identify the
incorrect line.
(A) Y 2  36  0
Y 2  36
Y6
(B) Y 2  5Y  0
Y(2Y  5)  0
Y  0 or 5/2
(C) (Y  6)2  0
Y  6  0
Y  6
(D) Y 2  Y  12  0
Using the standard formula:
a  2, b  1, c   12
Y  (1(1  4  212)0.5)/2  2
Y  2.2 or  2.7 to one d.p.
1.1.18 A price of £2,500 includes VAT at 17.5 per cent. Find the price exclusive of VAT
correct to the nearest £.
1.1.19 For each of the following solve for x in the inequality
(A) 5x  10  20
(B) 2x  5 15
(C) x/2  10 30
(D) 5x  20 120

Part 1.2 Basic mathematics

A small company produces specialised posters. The total cost is made up of three
elements  materials, labour and administration  as follows:

Materials £0.50 per poster

Labour £15 per hour
Administration £10 per 100, plus £50.

The set-up time for printing takes two hours, and the posters are run off at the rate of
300 per hour.
1.2.1 If the number of posters produced is denoted by N, write down the formulae for
the following in £:
(A) the total cost of materials,
(B) the time taken to produce the posters,
(C) the total labour costs of production,
(D) the administration costs.
 FUNDAMENTALS OF BUSINESS MATHEMATICS 31

1.2.2 Calculate the solutions to Question 1.2.1 using Excel. You will first have to create

BASIC MATHEMATICS
a spreadsheet to represent the data for the printing company.
1.2.3 If the total cost were given by C  92  0.7 N, which of the following is the cor-
rect interpretation of the value 92?
(A) Even when no posters are produced there is a cost of 92.
(B) For every 100 posters produced there is an extra cost of £92.
(C) The cost rises by 70p for every 92 posters produced.
Which of the following is the correct interpretation of the value 0.7?
(D) The cost of producing 100 posters is £92  0.7.
(E) Then no posters are produced there is a cost of £0.7 per hour.
(F) Costs rise by 70p for every extra poster produced.
Calculate the following:
(G) the total cost of producing 1,000 posters,
(H) the number of posters which can be produced for £500 (to the nearest whole
number),
(I) the number of posters which can be produced for £N (to the nearest whole
number).

Part 1.3 Accuracy and approximation

A company is preparing future production plans for a new product. Research findings sug-
gest that next year the company could make and sell 10,000 units (20 per cent) at a
price of £50 (10 per cent), depending on size of order, weather, quality of supply, dis-
counts, and so on.
The variable costs of production for next year, given these data, are also uncertain but
have been estimated as follows:

Type Costs (£) Margin of error

Materials 150,000 2%
Wages 100,000 5%
Marketing 50,000 10%
Miscellaneous 50,000 10%

1.3.1 Complete the following table showing the maximum and minimum values that
might occur. The first line has been completed in order to show what is required.
Answers carry 1 mark each.

Minimum Maximum
Number of units sold 8,000 12,000
Selling price per unit £ £
Cost of materials £ £
Cost of wages £ £
Cost of marketing £ £
Miscellaneous £ £
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Solutions to
Revision Questions 1
Solutions to Part 1.1
1.1.1 Answer: (B)
Volume  2x3  1,458
x3  1,458/2  729
x  (729)1/3  9.

1.1.2 Answer: (C)

( x 2 )3 x6
 x
x5 x5
xm
based on rules (x )  x
m n mn
and n  x (mn ) .
x
1.1.3 Answer: (D)
Let there be X cases of product D. Then:
20  £7.84  10  £8.20  12  £8.50  X  £8.60  £469.80
i.e. 340.8  8.6X  469.8
8.6 X  469.8  340.8
8.6 X  129
X  129  8.6
X  15

Number of items  12X  12  15  180.

1.1.4 Answer: (B)
£15,000  £3,500  £11,500, which is the taxable part of earnings, after tax at
23 per cent. Hence, taxable earnings are (£11,500  0.77)  £14,935 before tax,
and gross earnings are £14,935  £3,500  £18,435.

33
34 SOLUTIONS TO REVISION QUESTIONS C3

1.1.5 Answer: (A)

BASIC MATHEMATICS

Reduced price, including sales tax  £90.68  80%  £72.54. Without sales
tax: £72.54  (100/119)  £60.96.
1.1.6 Answer: (B)
x 1  1/x, by definition.
1.1.7 Answer: (C)

Batch Cost £ Cumulative cost £

100 at £50 5,000
Next 150 8,250 13,250
Next 11,200 24,450
Final 100 at £x 100x 24,450  100x

Total  30,151  24,450  100x

30,151  24,450  100x  5,701
x  5701/100  57.01.
1.1.8 Answer: (B)

100
84 p   74.6 p  price without VAT
112.5
117.5
74.67 p   88p.
100

1.1.9 Answer: (C)

2 DC
Q2 
PR
Q 2 PR  2 DC
Q 2 PR
 D  600.
2C

1.1.10 Answer: (D)

Maximum values of p and q  11 and 1,100
Minimum value of n  180
Therefore: 11  (1,100/180)  67.

1.1.11 Answers: (A), (B)

Five per cent of P is 5P/100, so the result will be P  5P/100  P  0.05P  1.05P.
In answer (C), P has been reduced by 5 per cent. In D, the 5 per cent of P has
been calculated but not added to the original amount.
 FUNDAMENTALS OF BUSINESS MATHEMATICS 35

1.1.12 The correct answers are:

BASIC MATHEMATICS
(A) 268.98
(B) 269.0
(C) 269
(D) 300
(E) 269
(F) 269.0.
1.1.13 The correct answers are shown with some of the prior workings:
(A) 7  10  17
(B) 7  8  56
(C) 28  12  16
(D) 10/5  2
(E) 8  20  2  26
(F) 4  10  40.
1.1.14 The correct responses are shown with some of the workings:
(A) Correct a12/a8  a4
(B) Incorrect a(6  (5))  a11
(C) Correct a(8/4)  a2
(D) Incorrect 1/an  a n, so 1/a 7  a7.
1.1.15 (a) Answer: (B)
The steps are:
V/P  (1  r)n
(V/P)1/n  1  r
(V/P)1/n 1  r.
(b) V  250  1.046, so the answer is 316.
1.1.16 The correct answers are as follows:
(A) 60(20  Y)  25Y Correct
(B) 1,200  Y  25Y Incorrect: the Y should have been multiplied by the
60
(C) 1,200  26Y Correct
(D) Y  1,200/26 Correct
(E) Y  46.15 to two d.p. Correct.
1.1.17 The incorrect lines were as follows:
(A) Y  6, because Y  6
(B) Y(2Y  5)  0 is wrong: Y 2 is not 2  Y  Y
(C) Y  6 is wrong: 0 is the same as 0 and the correct answer is 6
(D) The line a  2, b  1, c  12 is wrong: a  1.

1.1.18 The price exclusive of VAT is £2,500/1.175  £2,128