Financial Performance - index numbers

angi13

Hello, I need some help to understand on how to use index numbers please.

Basically I am trying to resolve and understand the below example:

The cost per unit of a product has increased from £72 in January to £80 in April. The cost per unit was £70 when the index was rebased to 100.

Now just need to calculate what was the cost index in April and the increase from January to April (%)

Thank you very much in advance.

Cudey

Hi Angi13

I'm having one of those days, so this may not be totally correct, but I have a saying of "Actual over Base times Base" stuck in my head.

So the new cost index = £80 (April's cost) / £70 (The original base cost) * 100 (Base index) = 114.2857

The price increase is £80 (Actual) / £72 (Base cost) * 100 = 111.11 = Which equates to 11%

Hope that's right and helps!

angi13

Hi Cudey,

Thank you so much for your help with this question.