Budgeting Exam Question?

Omer AYDINLI

Could anyone help please?

Q- Next year, energy cost is 228 800. This issumes a %4 increase in energy and %5 increase in gas.
However, energy savings measures are being proposed instead of increasing, consumption should be reduced by %10.
The energy budget should be ..... ?

A- a- 178200 b- 198000 c- 217800 d- 220000

Thanks in advance four your detailed explanation.

omega man

Hi, I have taken and passed my budgeting exam only recently.
This question can be tricky to answer.
Basically you always make the first adjustment so here 228,800/1.04=220,000
You only need to adjust for the second part if it is referred to again in the final part of the question.
So energy consumption has gone down 10% and there is no reference to the gas prices.
Therefore 220,000-10%=198,000
I hope this helps.

Omer AYDINLI

Hello Omega,
Thanks for your great help and congratulations, my exam date 9th November.

A little bit confused because why you did not do any calculation for %5 increase in gas. I think that it is part of the energy cost too.

Clintm15

Omer AYDINLI wrote: »

Hello Omega,
Thanks for your great help and congratulations, my exam date 9th November.

A little bit confused because why you did not do any calculation for %5 increase in gas. I think that it is part of the energy cost too.

Hello Omer,

The reason he didn't make any adjustment for gas is because it is not mentioned to do so in the question. At least that's how I'm interpreting it.

Jo Clark

Clintm15 wrote: »

Hello Omer,

The reason he didn't make any adjustment for gas is because it is not mentioned to do so in the question. At least that's how I'm interpreting it.

I agree, I also read the question and would only calculate on energy as this is where they mention saving measure proposals.

janwal

I read it wrong the first time but realised where I had gone wrong, at least one question I may be able to answer :001_unsure: not happy this year too much info to learn, well exam is on on 6th Dec so who knows

Jo Clark

janwal wrote: »

I read it wrong the first time but realised where I had gone wrong, at least one question I may be able to answer :001_unsure: not happy this year too much info to learn, well exam is on on 6th Dec so who knows

Lots of time to go Jan, and you will be fine. Remember to read and re-read the questions and answer what is asked, not what you think they asked/what you want to answer!

Don't forget we are all here to help you :001_tongue:

nightshade

Sorry to dig up an old thread, but how does this work when we have increases and reductions?

Practise assessment 4:

Budget was set at £302,400. This assumed a 4% reduction in production volume and a 5% increase in prices.
However production is 6% lower and there has been no price increase.

I'm assuming to remove my 4% reduction I multiple by 1.04 giving £314496 then divide by 1.05 to remove my price increase, giving last years actual figure as £299520.
Now we ignore the price increase as it hasn't happened, and reduce the figure by the 6% drop in volume - x0.94? or divide by 1.06 ? Neither give the correct answer of £282000....... Is the calculation different when we're reducing one and increasing another?

Nps

Hang on a sec, I'm sure I answered this same question for someone a few weeks ago. I'll just see if I can find it in my old posts and will copy and paste it here.

Nps

Copied and pasted from old thread.........

Hi,

First you need to establish what last years figure was.

The question is telling you that £302400 is 4% less than last yr with regards to production and 5% more than last yr with regards to prices.

So 302400 is 96% of last yr (production), hence last year must have been 302400/96*100=315000.
We also know that this is 105% of last yr (prices) so last yearr must have been 31500/105*100=£300000 in total.

As production actually turned out to be 6% lower, and there was no price increase, this year is 300000/100*94=282000.

nightshade

Thank you so much for that - it's cleared up a little muddle :thumbup1:

omega man

One other thing to remember just because there is a reduction and an increase does not mean you have to do both calculations. The clue is what the the question wants from you and that is do they refer to the second increase/reduction or not.Here they said there was no price increase so they DID refer to the second part.You always have to do the first calculation and another hint,if it is not a round number you got the wrong answer.