Index factor question

fizzyt

Please help me try to clarify something.

In practice simulations for Unit 7 I have come across a task that requires you to write the index factor used to restate the sales figures. I wrote as my answer the base index / current index x unadjusted sales figures eg. 184.6 / 173.8 x 152000.

Can someone please clarify to me which part of this equation is the index factor that was used??

sammyd22

fizzyt wrote: »

Please help me try to clarify something.

In practice simulations for Unit 7 I have come across a task that requires you to write the index factor used to restate the sales figures. I wrote as my answer the base index / current index x unadjusted sales figures eg. 184.6 / 173.8 x 152000.

Can someone please clarify to me which part of this equation is the index factor that was used??

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Hi,_
If you state the question as it is in the book ill try and find a solution for you! The imprssion im getting is that you need calculate the index factor which would usually be:

RPI at present - RPI at Original Date / RPI at original date = Index Factor

for example...

Sales figure in 1990 = £152,000

RPI - 1990 = 116.2
RPI - 1996 = 128.4

Solution.... (128.4-116.2) / 116.2 = .105 (Index Factor)

Therefore, £152,000 x .105 = £15,960

New total = (£152,000 + £15,960) = £167,960

Not sure why you would do this for sales though...

Anyways i hope this helps and apologies if ive mis-understood the question.

fizzyt

I suppose what I am trying to find out is.....what part is the index factor?? Is it the index number that you calculate? The calculation itself? Just part of the calculation?? What is it they are asking for when it says..write down the index factor used....

sammyd22

fizzyt wrote: »

I suppose what I am trying to find out is.....what part is the index factor?? Is it the index number that you calculate? The calculation itself? Just part of the calculation?? What is it they are asking for when it says..write down the index factor used....

The index factor from my example above is the (.105).

(Current RPI - Base RPI/Base RPI Index factor. I think this is what you are asking for.

But once your Index factor is calculated (.105) as above, you multiply it by your original figure, in this casy 152,000 and it gives you an addition due to inflation.

Apologies if ive mis understood!

fizzyt

Thanks Sammy...I just needed to clarify which part was the actual index factor