4 those Financial Performance experts

stuartanderstuartander Feels At HomePosts: 82Registered
AAT's practice exam question:

2. A company has provided the following information:

January February March
Total cos £100000 £120000 £125000
Total quantity purchased 10000 kg 11000 kg 10700 kg

The cost index for March based upon January being the base period of 100 is:

A 107
B 117
C 125
D 108
Now my answer is C- 125, but the AAT's answer booklet seems to think its B-117, am i missing something..

i got my answer using this calculation: 125000/100000*100= 125

Please help coz this is really confusing me..

Thanks

Stu

Comments

  • RinskeRinske Font Of All Knowledge Posts: 2,453Registered
    Hiya,

    You need to do two calculations here, you did one of them, but also have a look at the quantities and recalculate those to the same amounts as well.

    Cheers,
    Rinske
  • TerdooTerdoo Well-Known Posts: 144Registered
    Re: FP

    January 100,000/10,000 = 10

    February 120000/11000 = 10.90909

    March 125000/10700 = 11.68

    therefore, 11.68/10*100 = 116.8 or round up 117

    hope this helps
  • salihsalih Feels At Home Posts: 81Registered
    can you help me on cba3 section 1.5
  • NpsNps Experienced Mentor Posts: 782Registered
    When you ask for help, could you be more specific about what you do understand and what you don't. There are lots of people ready and willing to help but it would help them if they knew which bits in particular you need help with. In this particular question, working backwards from the answer will demonstrate how to do it.

    (Oh, and a 'please' or 'thank you' in requests also encourages people to help).
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