Budgeting - percentage calculations

dalmatian

This year's budget for raw materials was set at £319,770. This assumed a 2% price increase from the previous year together with a reduction in production volume of 5%. However, production volume remains static and the price increase is 3%.
Calculate the raw material cost forecast..... ??

dalmatian

Not sure where I am going wrong... 319770 x 100/102 = 313,500
313,500 x3%= 9405 3+3500 = 322,905. Yet answer is 339,900?

hasan

Ok so you do 319770/102*100=313500, 313500/95*100=330000,330000*3/100=9900,330000+9900=339900 #bingo

wabisabi

Hi
I think it's the way it is worded.

I agree with the first part of your caclualtion 319770 x 100 / 102 = 313500.
As this figure incorporates a reduction in production of 5% I would do this: 313500 / 95 x 100 = 330000
Now add the 3% price increase: 330000 + 9900 = 339900
Hope this helps

dalmatian

Thanks for your explanation. that 5% pulled me off track

hasan

Wabisabi look at the timing difference between my post and yours

wabisabi

A photofinish! Great minds think alike

hasan

My man

maereg

need help fort the different ways to calculate the percentage for example
we have 450 and 10% you will see 450x100/90 another time you will see direct multiplication of 450x10% another time you will see 450x10/90 and so on and so forth and other many ways please I need explanations of when to use each one.

wabisabi

Hi Maereg

One way to explain it would be to compare it to a VAT calculation. If you have a price of £24 that includes VAT and you want to calculate the price net of VAT you would divide £24 by 120 (because that price represents 100% + the 20% VAT) then multiply by 100.

If you are given a budget in which is has been assumed there will be an increase of 3%, then you know that the figure has to be divided by 103 and multiplied by 100 to get back to the pre increase cost. Or if the budgeted amount assumed a decrease of 5% you would divide by what you've got (ie 95% of the original amount) and multiply by what you want to get (100%)

On the other hand if you are given a number and just need to calculate a percentage just divide by 100 and multiply by the percent you want to calculate.

(It's the same principal as using index numbers - divide by what you've got and multiply by the amount you want to get.)

This is how I understand it - hope it helps.

maereg

Thanks