Business Mathematics

MODULE – 4

Mathematical Decision Making

MODULE

Mathematical Decision Making

Module Description

Cost management is the process of planning and controlling the costs associated with
running a business. It includes collecting, analysing, and reporting cost information
to more effectively budget, forecast, and monitor costs. Understanding expected and
unexpected expenses. Financial life begins by choosing a field to study in college,
borrowing money, and then finding work in a career. It is best to choose a field and a
career that interests, are likely to work in that field for a long time, although people
sometimes change careers later in life. The first and very important step is to work
hard to get the right education for entry and success in chosen field. There are many
other great careers and not everyone makes the average income in any one career. It
is also a good idea to talk to people who have actually worked in a career are
considering. They can tell what it is really like and give valuable suggestions. Be
prepared with a list of really good questions. There are many factors to consider in
choosing a career. What college degree will need? How long will have to go to college
and what will the costs be? How will pay for college? Where will find a job? Will have
to move to a different city? How stable is employment likely to be in that career? What
is a typical workday like? Will enjoy working in that field?

Unit 4.1
Planning and Cost Management

Unit 4.2
Accounting Applications (Bills, Exchange Rates and Currency
Exchange)

Unit 4.3
Business Statistics
Table of Contents
Unit 4.3 Business Statistics

Topics
Learning Objectives
Learning Outcome
4.3.1 Computing the Mean
4.3.2 Frequency Tables
4.3.3 Comparative Bar Graph
4.3.4 Line Graphs
4.3.5 Pie Charts
4.3.6 Conclusion
Summary
Activity
Activity Answer Key
References
Business Statistics

Learning Objectives

• Explain the concept of the mean as a measure of central tendency

• Discuss about the formula to calculate the mean for various data sets
• Describe the importance of frequency tables in organising data
• Analyse histograms based on frequency tables
• Examine multiple data sets using bar graphs
• Evaluate pie charts to visually depict parts of a whole

Learning Outcome

• Examine the concept of the mean as a measure of central tendency

• Discuss about the formula to calculate the mean for various data sets
• Describe the importance of frequency tables in organising data
• Analyse histograms based on frequency tables
• Examine multiple data sets using bar graphs
• Evaluate pie charts to visually depict parts of a whole

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Understanding data is a crucial aspect of decision-making and analysis across various

fields. The following content introduces essential tools and techniques for analysing
and visualising data effectively. Computing the Mean begins by exploring the concept
of the mean, a fundamental measure of central tendency that summarises data by
providing an average value. The mean offers insights into the typical value within a
data set and serves as a foundation for more advanced statistical analysis. Tables
builds on this by teaching how to organise data into frequency tables. These tables
help summarise large datasets by showing the frequency of each value or category,
making it easier to understand the data distribution. Constructing Histograms
introduces histograms, a graphical representation of data distribution. Histograms
allow for the visualisation of data spread and the identification of patterns such as
skewness or modality, which are essential for understanding the nature of the data.
Comparative Bar Graph focuses on visually comparing different data sets using bar
graphs. This tool enables the comparison of various categories or groups within a
dataset, highlighting differences and similarities in an easily interpretable format. Pie
Charts presents another powerful visual tool for data representation. Pie charts break
down data into proportional segments, offering a clear view of how different parts
contribute to a whole, making it ideal for illustrating percentage-based distributions.
Together, these tools provide a comprehensive approach to data analysis, equipping
learners with the skills to summarise, interpret, and present data effectively.

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4.3.1 Computing the Mean

The mean, often referred to as the average, is a measure of central tendency that
provides a single value representing the central point of a data set. It is calculated by
summing all the values in the data set and then dividing by the total number of values.
The mean is useful for understanding the general trend of the data and is commonly
used in various fields such as finance, economics, and social sciences.

The formula for the Mean:

Mean = (sum of all the observations)/(Total number of observations)

Example 1: Calculating the Mean of Monthly Expenses in Euros

Suppose you want to find the mean monthly expense for the following amounts in
euros:
• €400
• €550
• €600
• €450
• €500

Step 1: Add all the amounts together.

Sum= €400+€550+€600+€450+€500 = €2500

Step 2: Divide the sum by the number of values.

€2500
Mean= = €500
5
Outcome: The mean monthly expense is €500.

Example 2: Calculating the Mean Salary of Employees in Euros

Let's say you want to calculate the mean salary of a group of employees with the
following salaries:
€2,000
€2,500
€3,000
€2,200
€2,800

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Step 1: Add all the salaries together.

Sum= €2,000+€2,500+€3,000+€2,200+€2,800 = €12,500

Step 2: Divide the sum by the number of employees.

€12,500
Mean = = €2,083.33
6

Outcome: The mean salary of the employees is €2,083.33.

In both examples, the mean provides a simple and effective way to summarise the
data, giving insight into the overall pattern or trend within the dataset. The median of
a group of numbers is determined by arranging the numbers in numerical order and
finding the middle number. The median is useful when one value in the group is much
larger or much smaller than the rest of the numbers.

Example 3: Find the median salary of five employees whose salaries are €51,500,
€54,400, €57,600, €62,000, and €254,500.

The salaries are already in numerical order; the median is €57,600 because it is the
middle number of the five numbers arranged in order.

In example 3, the mean is €480,000 ÷ 5 = €96,000, but €96,000 is not representative of

the salaries of the five employees. The mean is very large because one employee
(perhaps the owner) has a very large salary compared to the rest of the group. The
median salary, €57,600, is more typical of the group.

If the number of values is even, the median will be halfway between the two middle
values. The median will be the mean of the middle two values.

The mode of a group of numbers is the number that occurs most often. None of
examples A, B, and C has a mode because each number occurs only once. The mode
is useful when the word average implies “most typical” or “happening most often”.
Retail businesses keep track of the items that sell most frequently so that they can
avoid shortages of those items.
Most frequently so that they can avoid shortages of those items.

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Example 4
1 1
Find the mode shoe size of 12 pairs of cross-trainer running shoes, sizes 6+ 6+ 72, +72,+,
1 1
8+ 82, +9+ 9+9+ 9+ 9+ 92
The mode is size 9, because 9 occurs most frequently.

In example 4 neither the mean nor the median makes any sense. The mean is (6+ 6+
1 1 1 1 1
72, +72,+, 8+ 82, +9+ 9+9+ 9+ 9+ 92). 98 ÷ 12 = 8.17, or 86. The median is halfway
1 3
between sizes 82 and 9, which would be 8.75, or 84. The store owner could not buy
1 3
any shoes in either size 86 or size 84 because those shoe sizes do not exist. However,
the store owner does want to stock several shoes in size 9.
The mean can be calculated only for numeric variables, no matter if they are discrete
or continuous. It's obtained by simply dividing the sum of all values in a data set by
the number of values. The calculation can be done from raw data, or data aggregated
in a frequency table. Here are a few examples of calculations.

Example 5
Soccer tournament at Mount Rival
Mount Rival hosts a soccer tournament each year. This season, in 10 games, the lead
scorer for the home team scored 7, 5, 0, 7, 8, 5, 5, 4, 1 and 5 goals. What is the mean
score of this player?

The sum of all values is 47, and there are 10 values. Therefore, the mean is 47 ÷ 10 =
4.7 goals per game.

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Example 6 – Traffic Fatalities

The following table lists the number of people killed in traffic accidents over a 10-year
period. During this period, what was the average number of people who lost their
lives every year? How many people die each day on average in traffic accidents?
Table summary
This table displays the results of the Number of fatalities in traffic accidents. The
information is grouped by Year (appearing as row headers) and Deaths (appearing as
column headers).

Year Deaths
2009 623
2010 583
2011 959
2012 1,037
2013 960
2014 797
2015 663
2016 652
2017 560
2018 619
Total 7,453

The total number of deaths is presented in the table (7,453). To get the yearly average,
the number of deaths is divided by 10, which is 745.3 deaths per year. To get the daily
average, the yearly average is divided by 365, which gives approximately 2 deaths per
day.
For a larger data set, it can be easier to summarise data in a frequency table before
calculating the mean. In this case, you need to weigh each possible value by the
frequency of the value to calculate the total.

Example 7 – Soccer tournament at Mount Rival

Let's go back to the Mount Rival soccer tournament. Suppose that five teams were
competing, each of them including 10 players for a total of 50 players. The number of
goals scored by each player was compiled, and the results are summarised in the
frequency table below. For example, we can see that eight players scored only one goal

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during the tournament. What is the average number of goals scored by the players
during the tournament?
Number of players by the number of goals scored

Table summary
This table displays the results of the Number of players by the number of goals scored.
The information is grouped by the number of goals scored (appearing as row headers)
and the number of players (appearing as column headers).

Number of
Number
goals
of players
scored
0 2
1 8
2 14
3 12
4 8
5 4
6 2

0 true zero or a value rounded to zero

You first need to calculate the total number of goals scored. To do that, you take each
observed value of the number of goals scored, which are values 0 to 6, and you
multiply each value by the number of players:
0 × 2 + 1 × 8 + 2 × 14 + 3 × 12 + 4 × 8 + 5 × 4 + 6 × 2 = 136
Since there are 50 players, the average is 136 ÷ 50 = 2.72 goals per player.

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Types of Mean
In statistics, there are three primary types of mean values that are commonly studied:

• Arithmetic Mean
The arithmetic mean is calculated by adding up all the values and then dividing by
the total number of values. This is the most commonly used type of mean.
Example: What is the arithmetic mean of the numbers 3, 5, 9, 5, 7, and 2?
Step 1: Add all the numbers together: 3+5+9+5+7+2=31
Step 2: Divide the sum by the total number of values: 31/6=5.16
So, the arithmetic mean is 5.16.

• Geometric Mean
The geometric mean is calculated by taking the nth root of the product of n numbers.
For two numbers, x and y, the geometric mean is ⬚√𝑥𝑦. For three numbers, x, y, and z,
the geometric mean is 3√𝑥𝑦𝑧.

Example 1: Basic Example

Imagine you want to calculate the geometric mean of the numbers 2, 8, and 32.
Step 1: Multiply the numbers: 2 x 8 x 32 = 512
Step 2: Since there are 3 numbers, take the cube root:
3
Geometric Mean = √512 = 8

Example 2: Growth Rates

Suppose an investment grows by 10%, 20%, and 30% over three years. The growth
factors would be 1.10, 1.20, and 1.30.
Step 1: Multiply the growth factors: 1.10 x 1.20 x 1.30= 1.716
Step 2: Since there are 3 years, take the cube root:
3
Geometric Mean √1.716 = 1.19
This means the average annual growth rate is about 19%.

Example 3: Currency Exchange

Suppose you exchanged euros for dollars at rates of 1.1, 1.15, and 1.2 over three days.
To find the average exchange rate:
Step 1: Multiply the rates: 1.1 x 1.15 x 1.2≈ 1.518
Step 2: Since there are 3 days, take the cube root:

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3
Geometric Mean = √1.518 =√1.14
This means the average exchange rate over the three days is approximately 1.14.
These examples illustrate how the geometric mean is useful when dealing with rates
of return, ratios, or growth rates.

• Harmonic Mean
The harmonic mean is used to average ratios, particularly when dealing with rates.
2𝑥𝑦
For two numbers x and y, the harmonic mean is given by: √
𝑥+𝑦
3xyz
For three numbers x, y, and z, the harmonic mean is:
𝑥𝑦+𝑥𝑧+𝑦𝑧

The Harmonic Mean is a type of average that is especially useful when dealing with
rates or ratios. It is calculated by dividing the number of observations by the sum of
the reciprocals of the values.

Example 1: Average Speed

Imagine you drive a certain distance at 60 km/h and return at 40 km/h. To find the
average speed over the entire trip, use the Harmonic Mean:
Step 1: Calculate the reciprocals of the speeds:
2XSpeed1+Speed2 2X60X40 2X2400 24800
Harmonic Mean= = = = = 48 KM
Speed1+Speed2 60+40 100 100
This means the average speed for the round trip is 48 km/h.

Example 2: Average Price per Unit

Suppose you bought 10 units of a product at $5 each and 20 units at $3 each. To find
the average price per unit:
1. Calculate the total number of units: 10+20-30
2. Calculate the reciprocals of the prices: 10/5 + 20/3 = 6.67
3. Add the reciprocals: 2+6.67 =8.67
4. The Harmonic Mean is: 30/8.67 = 3.46
This means the average price per unit is about $3.46.

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Example 3: Parallel Resistance in Electrical Circuits

In an electrical circuit, if you have two resistors with resistances of 4 ohms and 6 ohms
connected in parallel, the total resistance R can be calculated using the Harmonic
Mean:
Given resistances:
• R1=4 ohms
• R2=6 ohms
1 1
The reciprocals of these resistances are calculated as: +
4 6
To add these fractions, you need to find a common denominator. The least common
denominator (LCD) of 4 and 6 is 12.
1 3 1 2
Convert the fractions: = , = 12
4 12 6
1 3 2 5
1. Calculate the reciprocals of the resistances: =12 + 12 =12
𝑅
Finding the Total Resistance R

The total resistance R is the reciprocal of the sum of the reciprocals:

1 12
R= 5 = 5 .=2.4 ohms.
(
12)

This means the total resistance of the parallel circuit is 2.4 ohms.
The Harmonic Mean is particularly useful when the values are rates, such as speed,
price per unit, or resistance.

• Root Mean Square (Quadratic Mean)

The Root Mean Square (RMS) is used in various engineering and statistical
applications, especially when the data includes both positive and negative values. It
is calculated by taking the square root of the average of the squares of the values.
Example 1: RMS of a Set of Numbers
Suppose you have the numbers 3, 4, and 5 and want to find the RMS:
1. Square each number: 32 =9,42 = 16, 52=25

2. Calculate the average of these squares: Average = (9+16+25)/3 = 50/3 = 16.67

3. Take the square root of the average: RMS = √16.67 = 4.08

The RMS of the numbers 3, 4, and 5 is approximately 4.08.

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Example 2: RMS in Electrical Engineering

In AC (Alternating Current) circuits, the RMS value of a voltage or current is often
used because it represents the equivalent DC value that would deliver the same
power.
Suppose an AC varies between -10 A and +10 A in a cycle:
1. Square the current values: (-10)2=100, 102 = 100
2. Since these values are symmetrical, you can average them directly:
Average = (100+100)/2 = 100
3. Take the square root of the average: RMS = √100=10 A
The RMS current is 10 A, meaning it is equivalent to a DC current of 10 A.

Example 3: RMS in Statistics

RMS can also be used to measure the standard deviation of a set of residuals in
regression analysis, giving an idea of the average deviation from the trend line.
Suppose you have residuals of -2, -1, 1, and 2:
1. Square the residuals: (-2)2=4, (-1)2=1, 12 =1, 22=4
2. Calculate the average: Average =(4+1+1+4)/4 = 10/4 = 2.5
3. Take the square root: RMS = √2.5 =1.58
The RMS of the residuals is approximately 1.58.
These examples illustrate the versatility of the RMS in handling both positive and
negative values, making it a valuable tool in fields like engineering, physics, and
statistics.

• Contra Harmonic Mean

𝑥 2 +𝑦 2
The contra harmonic mean for two numbers x and y is calculated as: Mean =
X+Y
For n values, the formula generalises accordingly.
These types of means offer different perspectives on data, depending on the context
and nature of the values being analysed.
The Contra Harmonic Mean is a type of average that emphasises larger values in a
dataset. For two values at and y, it is calculated as:
𝑥 2 +𝑦 2
Contra Harmonic Mean = X+Y

Example 1: Two Values

Consider the numbers = 3 and y = 5.
𝑥 2 +𝑦 2 32 +52
To find the Contra Harmonic Mean: X+Y 3+5

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1. Calculate the squares of the numbers: 32 =9, 52 =25

2. Sum the squares = 9+25 =34
3. Sum the original numbers: 3+5 =8
34
4. Calculate the Contra Harmonic Mean = = 4.25
8
The Contra Harmonic Mean of 3 and 5 is 4.25.

Example 2: Three Values

Consider the numbers a x= 2, y= 4, and Z = 6.
𝑥 2 +𝑦 2 +𝑍 2
To find the Contra Harmonic Mean =
X + Y+Z
2 2 2
1. Calculate the squares: 2 =4, 4 =16, 6 =36
2. Sum the squares = 4+16+36=56
3. Sum the original numbers: 2+4+6 =12
4. Calculate the Contra Harmonic Mean
Contra Harmonic Mean= 56/12 = 4.67
The Contra Harmonic Mean of 2, 4, and 6 is approximately 4.67.

Example 3: Unequal Values

Consider the numbers x = 1 and y = 10:
1. Calculate the squares: 12 =1, : 102 =100
2. Sum the squares = 1+100 = 101
3. Sum the original numbers:1+10 =11
4. Calculate the Contra Harmonic Mean = 101/11 = 9.18
Contra Harmonic Mean= 9.18
The Contra Harmonic Mean of 1 and 10 is approximately 9.18.

This means emphasising the influence of larger values, making it particularly useful
in scenarios where higher values are more significant.
The various types of mean—Arithmetic, Geometric, Harmonic, Root Mean Square,
and Contraharmonic—provide different methods for summarising data, each suited
to specific contexts. The Arithmetic Mean is the most common, offering a
straightforward average of a data set. The Geometric Mean is ideal for multiplicative
relationships, while the Harmonic Mean is particularly useful for averaging rates. The
Root Mean Square is valuable in scenarios involving both positive and negative
values, and the Contraharmonic Mean offers a unique approach when the emphasis
is on larger values in the data set. Understanding these different means allows for

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more nuanced data analysis, ensuring that the most appropriate measure is used
depending on the nature of the data.

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4.3.2 Frequency Tables

A frequency table is a tool to organise data by showing how often each value or group
of values occurs in a dataset.
Key Features of Frequency Tables:
• Categories or Values: Lists the different values or groups (e.g., scores, age ranges).
• Frequency: Indicates the number of times each value or category appears.
• Cumulative Frequency (optional): Adds up the frequencies as the table
progresses, showing the total number so far.

How It’s Helpful:

• Data Organisation: It neatly summarises large amounts of data into a simple
table.
• Spotting Patterns: This makes it easier to see which values are most or least
common.
• Preparing for Graphs: Frequency tables are often the first step before creating
histograms, bar charts, or other graphs.
For example, if a survey is conducted about favourite fruits, a frequency table could
record how many participants chose apples, bananas, oranges, etc. This table quickly
shows which fruit is the most popular.

Business applications, such as sales results for all Burger King restaurants, often
involve hundreds or thousands of numbers. Interpreting data that are literally pages
of raw numbers is impossible. To make sense of such data, we organise the individual
values into groups called classes of data or data classes. Adjacent classes "touch each
other," but cannot overlap, not even by one cent. Also, classes are normally the same
width. In example E, the width of each class is €5,000. The number of values in each
class, called the frequency of the class, is summarised in a table called a frequency
table.

Steps to Develop a Frequency Table

1. Determine the classes of data and list the classes in one column.
2. Tally the data by making one mark for each data item in the column next to the
appropriate class.
3. Count the tally marks for each class and write the number in the column next to
the tally marks.

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Listed below are the salaries of 25 full-time office employees of a large insurance
company. Make a frequency table with five classes: $40,000 up to but not including
$45,000, $45,000 up to but not including $50,000, and so on.

$42,500 $41,300 $53,500 $62,400 $47,500

45,400 54,600 41,000 44,400 59,100
48,000 52,000 57,500 62,500 44,000
53,600 46,200 53,500 51,800 56,400
55,500 46,000 45,200 46,000 60,800

Frequency Table
Class Tally Frequency
$40,000 up to $45,000 IIII 5
$45,000 up to $50,000 IIII II 7
$50,000 up to $55,000 IIII I 6
$55,000 up to $60,000 IIII 4
$60,000 up to $65,000 III 3
Total 25

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Computing the Mean of Large Data Sets

When a data set contains many numbers, as in example E, a computer spreadsheet is
usually used to compute the mean. If you use a calculator, be sure to check your work.
One way to do so is to add all the numbers twice. One method to add them twice, but
in two different orders, is shown in the following steps

Compute the mean of the 25 salaries in example E.

$ 42,500 $ 41,300 $ 53,500 $ 62,400 $ 47,500 $ 247,200

45,400 54,600 41,000 44,400 59,100 2,44,500
48,000 52,000 57,500 62,500 44,000 2,64,000
53,600 46,200 53,500 51,800 56,400 2,61,500
55,500 46,000 45,200 46,000 60,800 2,53,500
$245,000 $240,100 $250,700 $267,100 $267,800 $1,270,700
The sum of the row totals and the sum of the column totals are both $1,270,700.
Mean = $1,270,700 ÷ 25 = $50,828

Constructing histograms
In business, statistical information is first summarised clearly in tables. For
presentation, the results are then often displayed in charts or graphs. Popular graphs
include the histogram, the bar graph, the line graph, and the pie chart (circle graph).
Histograms, bar graphs, and line graphs all have perpendicular axes. Labels are
placed at the left (the vertical axis) and bottom (the horizontal axis). A histogram is a
diagram that presents the grouped data from a frequency table. The classes are
positioned adjacent to each other along the horizontal axis, and the frequencies are
written along the vertical axis. The numbers on the horizontal axis increase from left
to right. The numbers on the vertical axis increase from bottom to top.
Salary Frequency
$40,000 up to $45,000 5
$45,000 up to $50,000 7
$50,000 up to $55,000 6
$55,000 up to $60,000 4
$60,000 up to $65,000 3
Total 25

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Fig 4.3.1: Histogram

A bar graph, or bar chart, resembles a histogram except that there may not be a
numeric scale on the horizontal axis, and the bars normally do not touch each other.
Sosa's Markets has grocery stores in four different towns: Davis, Hubbard, Bay View,
and Easton, although the Davis store just opened in July of last year. The table in
shows the annual sales revenue, cost of goods sold, operating expenses, and net profits
for both the current year and the previous year. The bar graph in Figure illustrates the
data from the current year. Data from the table in Figure are used in various examples
throughout this chapter. Note: It does not make sense to have the vertical bars "touch
each other" as in a histogram. The four stores are distinct objects. If the horizontal axis
were "time," like consecutive months of the year, then you could make a bar graph.
However, it makes sense to use a histogram because last year, it could touch this year

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at midnight on December 31. However, as you will see, we can make some useful
variations of bar graphs that we really cannot do with histograms

Annual sales revenue, cost of goods sold, operating expenses and net profit of
current year and the previous year

Revenues, Expenses, and Net Profits (in millions of dollars)

Sosa's Markets Sales Data for the Current Year (In Millions of Euro)
Net Net
Cost of Profit Profit
Sales Goods Operating (This (Last
Location Revenue Sold Expenses year) Year)
Davis 1.5 0.75 0.5 0.25 0.15
Hubbard 3.25 1.75 1 0.5 0.75
Bay
View 2 1 0.75 0.25 0.5
Easton 4 2 1.25 0.75 0.5

Fig 4.3.2: Bar Graph

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4.3.3 Comparative Bar Graph

A comparative bar graph, also known as a grouped or clustered bar graph, displays
two or more sets of data side by side in the same graph. Each group of bars represents
different categories, allowing for easy comparison between them.
Key Features of Comparative Bar Graphs:
• Bars: Multiple bars are grouped for each category.
• X-axis (horizontal): Represents the categories being compared.
• Y-axis (vertical): Shows the values or frequencies for each category.
• Colour or Pattern: Different bars within the same category are often colour-
coded or patterned to distinguish the datasets.

How It’s Helpful:

• Comparing Data: Clearly shows differences and similarities between multiple
groups or categories.
• Visual Clarity: This makes it easier to see how different datasets relate to each
other.
• Trend Analysis: Useful for comparing trends across categories, such as sales
figures over time for different products.
For example, a comparative bar graph could compare students' test scores in two
different classes across several subjects. Each subject would have two bars side by side,
one for each class, making it easy to see which class performed better in each subject.
Two bar graphs can be combined on one grid to make a comparative bar graph. This
permits the statistician to make a graph comparing two different data sets. The graph
for Sosa's Markets below the figure compares each store's net profit this year with its
net profit last year. Each store has one pair of bars, and the two bars in each pair need
to be coloured or shaded differently to help the reader distinguish between the two
years.

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Fig 4.3.3: Comparative Bar Graph

Component Bar Graph

A bar graph constructed to show how certain data are composed of various segments
is a component bar graph. The above figure shows how the current sales revenue is
composed of the cost of goods sold, operating expenses, and net profit. As in the
comparative bar graph, the component parts are coloured or shaded differently to
permit easier reading

Fig 4.3.4: Component Bar Graph

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4.3.4 Line Graphs

A line graph, also known as a line chart, is a visual tool used to represent data,
showing the relationship between two or more variables over time. This is done by
connecting data points with straight lines.
Businesses often analyse data over time, perhaps monthly or annually. As we
mentioned earlier, both a histogram and a bar graph can be used when time is on the
horizontal axis. Another useful graph for illustrating data over time is the line graph.
Plot the heights with single points above each month (or year). Then connect the
consecutive points with straight line segments. Notice that it would not make sense to
put time on the vertical axis
A line graph is a type of chart used to display data points over time or across
categories. It connects these points with a line, making it easy to see trends, patterns,
or changes.
Key Features of Line Graphs:
• X-axis (horizontal): Usually represents time or categories.
• Y-axis (vertical): Shows the values or measurements.
• Data Points: Marked where the X and Y values intersect.
• Line: Connects the data points, highlighting the trend.

How Line Graphs are Helpful:

• Visualising Trends: They clearly show how something changes over time (e.g.,
a student's grades improving across semesters).
• Comparing Data: Multiple lines can compare different sets of data on the same
graph.
• Identifying Patterns: Patterns, like cycles or steady growth, are easier to spot.

Types of Line Graphs

Let’s explore the different types of line graphs:
• Simple Line Graph: The most common type features a single line that shows
the relationship between two variables over time. A basic line graph is an example of
this type.
• Multiple Line Graph: This type includes two or more lines within a single
graph, representing data from either the same or different categories. It allows for easy
comparison between the datasets. A double-line graph is a specific example of a
multiple-line graph.

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For instance, a graph showing the sales of products A and B together would be a
multiple-line graph.

Fig 4.3.5: Multiple-line Graph

• Compound Line Graph: In this type, multiple data sets are combined into a
single graph to display relationships between various variables or categories. The
main purpose is to represent different variables on one graph. An example could be a
graph showing the relationship between time and the number of vehicles.

Fig 4.3.6: Compound Line Graph

Advantages of Line Graphs

• Data Visualisation: Line graphs help make data easier to understand.
• Clear Overview: They provide a concise view of the data.

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• Prediction: Line graphs simplify making predictions.

• Comparison: They make it easier to compare data across different categories.

Disadvantages of Line Graphs

• Complex Data: Line graphs are not effective for representing complex data.
• Non-linear Relationships: They struggle to represent non-linear relationships
accurately.

Uses of Line Graphs

• Data Visualisation: Line graphs make raw data more understandable.
• Data Comparison: They are used to compare data across different categories.
• Prediction: They aid in making predictions based on trends.

Following are five months of expenses for materials for the residential and commercial
divisions of Solar Metals, Inc., a custom metal-fabricating business.
Residential Jan. Feb. Mar. Apr. May
Commercial
Residential 24000 30000 26000 36000 32000
commercial 46000 40000 50000 46000 54000
It shows a comparative bar graph for this data. And two-line graphs, with one line for
the residential division and the other for the commercial division.

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Fig 4.3.7: Comparative Bar Graph

As we mentioned earlier, there is no convenient, unconfusing method to make one

histogram show all the information. If you take the comparative bar graph but draw
all the adjacent vertical bars, the result is NOT a histogram. Histograms are simply not
normally used for this kind of data. Their only purpose here is for you to see that the
line graph and the comparative bar graph are much better suited to illustrate the
differences in the data.

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Fig 4.3.8: Histogram – Residential Division

Fig 4.3.9: Histogram - Commercial Division

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4.3.5 Pie Charts

A pie chart, sometimes called a circle graph, resembles a component bar graph
because it shows how one quantity is composed of different parts. In a pie chart,
however, the parts normally are written as percents. The figure gives the sales data
breakdown for just the Bay View location of Sosa's Markets. The pie chart shown
below indicates how the Bay View sales revenue for the current year is composed of
the cost of goods sold, operating expenses, and net profit.
A pie chart is a circular graph divided into slices, where each slice represents a part of
the whole. The size of each slice corresponds to the percentage or proportion that part
contributes to the total.

Key Features of Pie Charts:

• Slices: Each slice represents a category or part of the data.
• Whole Circle: Represents the total sum of all parts (100%).
• Labels: Often used to show the category name and percentage.

Advantages of Pie Charts:

• Simple Visualisation: They make it easy to see how different parts compare to
the whole.
• Clear Proportions: The size of each slice visually shows the proportion of each
category.
• Quick Interpretation: At a glance, you can understand the relative sizes of
parts

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Before the pie chart is drawn, the data are changed into percentages. The size of each
part of the circle can be reasonably estimated by using the fractional equivalents of the
percent. The table below shows that the cost of goods sold is 50 % of the circle.
Operating expenses make up 37.5 % of the circle. The remaining represents net profit.

Sales Revenue for Bay View Market-Current

Year
Amount Percent
Cost of Goods Sold $1,000,000 50.00%
Operating Expenses 7,50,000 37.50%
Net Profit Last Year 2,50,000 12.50%
Sales Revenue $2,000,000 100.00%
$1,000,000 $2,000,000 = 50.0%

$750,000 $2,000,000 = 37.5%

$250,000 $2,000,000 = 12.5%

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Fig 4.3.10: Pie Chart

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4.3.6 Conclusion

Using various data organisation and visualisation methods, such as computing the
mean, and constructing frequency tables, histograms, comparative bar graphs, and pie
charts, provides a comprehensive approach to summarise, analyse, and present data
effectively. Each tool serves a unique purpose, helping to understand trends, compare
datasets, and visualise proportions, ultimately enhancing the clarity and accuracy of
data analysis. Bar charts are ideal for making comparisons between categories and
displaying trends over time or among groups. Pie charts, on the other hand, are best
used to illustrate how a whole is divided into parts and to emphasize the relative
proportions of categories. Both types of charts are invaluable for data visualisation,
helping to turn complex data into accessible, easy-to-understand visual summaries.

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Summary

o The mean is a fundamental statistical measure that represents the average of a

dataset, helping to summarise the central tendency of the data.
o Frequency tables organise raw data by showing how often each value occurs,
making it easier to understand and prepare for further analysis.
o Histograms visually represent the frequency distribution of data, showing how
values are spread across different intervals and helping to identify patterns or
trends.
o Comparative bar graphs display multiple datasets side by side, allowing for
easy comparison of different categories and highlighting differences and
similarities.
o Pie charts illustrate the proportions of parts to a whole, making it simple to see
how different categories contribute to the total. These techniques are essential
for effectively organising, analysing, and visualising data meaningfully.

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Activity

Analysing Student Exam Scores

A teacher wants to analyse the exam scores of a class of 30 students to understand
their performance better. The teacher decides to use several statistical tools, including
computing the mean, creating a frequency table, and using various types of graphs to
visualise the data.
The exam scores are as follows: 85, 92, 76, 81, 95, 78, 88, 84, 90, 79, 85, 89, 74, 82, 86, 93,
77, 80, 87, 91, 83, 75, 88, 94, 92, 89, 76, 84, 82, 90.

Question 1: What is the students' mean (average) exam score?

The teacher creates a frequency table to organise the exam scores into intervals of 10
(70-79, 80-89, 90-99).
Score Range Frequency
70-79 6
80-89 14
90-99 10
Question 2: Which score range has the highest frequency, and what does this indicate
about the students' performance?

Question 3: What can a comparative bar graph reveal about the performance of two
different classes?

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Activity Answer Key

1. To compute the mean, add all the scores together and divide by the number of
students.
Mean = (85 + 92 + 76 + 81 + 95 + ... + 82 + 90) / 30
Mean = 2591 / 30 = 86.37 (rounded to two decimal places)

2. The 80-89 score range has the highest frequency with 14 students. This indicates that
most students scored in this range, suggesting that the majority of the class performed
well but not exceptionally.

3. A comparative bar graph will allow the teacher to easily see which class performed
better overall or in specific score ranges. For example, if Class A has more students in
the higher score ranges compared to Class B, it suggests that Class A performed better.
It also highlights differences in the distribution of scores between the two classes.

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Bibliography
External Resources

1. Mathematics Of Accounting by Arthur B. Curtis, B.C.S., C.P.A. and John H.

Cooper, B. Accts., C.P.A. Third Edition Prentice-Hall, Inc. Englewood Clifa
1987.

2. Business and Financial Mathematics by Valerie watts,2021.

E - References
• https://www.w3schools.com/statistics/statistics_frequency_tables.php
• https://www.geeksforgeeks.org/line-graph/

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