Budget question
beavis182
Registered Posts: 130 Dedicated contributor 🦉
This years budget for raw materials was set at £216,300. This assumes a 3% increase in production volume and a 5% increase in raw material prices compared to previous year.
However production volume is 10% higher than the previous year and there has been no price increase
Calculate the material cost forecast??
Not sure how to work this one out.
I thought it would be 216300/105 x 100 = 206000.
The answer should be £220,000 but not sure how to work it out...
However production volume is 10% higher than the previous year and there has been no price increase
Calculate the material cost forecast??
Not sure how to work this one out.
I thought it would be 216300/105 x 100 = 206000.
The answer should be £220,000 but not sure how to work it out...
0
Comments
-
216300 / 1.03 then divide by 1.05 takes you back to previous year figure = 200,000
so applying 10% increase in volume (no price increase) = 200,000 x 1.1 = 220,000
note:
1.03 = 103/100
1.05 = 105/100
1.1 = 110/1000 -
perfect, thanks for that. Seems i was making it harder than it actually was. At least if it comes up on the exam on Monday I should be fine :-)0
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