Base Index question for financial performance

katiekitkat123 Registered Posts: 23 New contributor 🐸
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
    hunyb Registered Posts: 11 New contributor 🐸
    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.

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