Base Index question for financial performance

katiekitkat123

Question from Osborn books website, stating to get the variances but stuck on how to work out the base index

A company has provided the following information:

January February March
£64,500£71,500£92,050 total cost
5,000kg5,500kg7,000kg total quantity
................260...............Price Index



Complete the table by inserting the price index figures for January and March,
rounded to the nearest whole numbers if necessary.

Any help would be greatly recieved

Thank you

katie (again)

hunyb

Hi Katie,

Haven't you got your exam tomorrow?

Anyway I had a look and .....

1/ calculate the cost per kg for each month

2/ divide the known index by the cost per kg for Feb (260/£13.00) x Jan cost £12.90 = 258

and the same again for March 260/13.00 x £13.15 = 263

Remeber that 260 is the base index given, so you use this to calculate the others.

I hope I have made sense of this for you & good luck for tomorrow.

hunyb