Budgeting Question stuck...

topcat

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

Nie

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.

Nps

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.

topcat

Thank you both :thumbup1::thumbup1::thumbup1: