Budgeting Question stuck...

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Registered Posts: 452
Hi,

does anyone know how to work out the below please because i am stumped..

The budget for the cost of gas for next year was originally set to £121,000 this assumed a 10% increase in costs from last year, and assumed that consumption would not change.

It it is now beloved that until cost will increase by 7% from last year, but that consumption will increase by 4%

The cost of the gas for last year was ? £X

Allowing for both a change in consumption and a price increase the budget for next year should by ? £X

I get:

£121,000 / 90% to get the original of 108,900 ( the answer should be £110,000 but i have no idea how?)

then for the second part i was going to do £108,900 * 111% -- second part of the ques should be £122,408

• Registered Posts: 12 Regular contributor ⭐
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I haven't started Budgeting yet, but I think my numbers work.

£121,000/1.1 will get you the £110,000, as you want to reduce the budget by 10%. (How do you calculate VAT when you're given a price with VAT included? I do the same sort of maths.)
Then to increase the budget for the extra 4% consumption: £110,000 * 1.04= £114,400.
Then to increase the cost by 7%, £114,400* 1.07= £122,408

You could account for the change in cost first and the change in consumption second, and the numbers still work out the same.
• Registered Posts: 782
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Yes, as above!

Just remember that you need to find last years figure as a base to start from. So if £121,000 is a 10% increase, you know that it is equal to 110% of that base figure, hence last years charge was 121000/110*100.

Then deal with the increases separately, but as mentioned above, adding them in either order will give you the same result.
• Registered Posts: 452
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Thank you both :thumbup1::thumbup1::thumbup1: