Budgeting mock exam Q Help please

Newts22

HI there

Im just trying to do the BGT mock exam 2 from the AAT site.
Stuck on question 2.1, c.

This years budget for raw materials was set at £216300. This assumes a 3% increase in production and 5% increase in raw material cost.

However, production volume is 10% higher than the previous years.

Calculate material cost forecast = £220000

I am really struggling to get to the £220000 figure, i know i will kick myself, but any help gratefully received!!

Thanks in advance

Diddy Mau

Hello,

the budget of £216,300 includes 3% & 5% increse.
but the actual increase was 10% so first remove the 3 & 5%
216300/103*100=210000
210,000/105*100=200,000

Now add the actual increase in cost
210,000*10%=220,000

hope this makes sense

Newts22

Diddy


Thank you! I thought I did that originally but obviously not lol, was driving me crazy but so simple!
Cheers