Can someone please help with question 4 on the sample assessment 2 Budgeting paper? thanks

racheyc

Sales Revenue Actual Yr1 £12200 yr2£12747 yr3 £13527 yr4£14091 Forecast yr5 ?
Sales price index yr1 110.0 yr2 114.0 yr3 120.0 yr4 124.0 yr5 130.0
Sales revenue at yr 1 prices (£) yr1 - yr 4 ?

question:
use index to calculate sales revenue yr1-4 at yr1 prices
project sales revenue at yr 1 prices forward to yr 5
calculate yr 5 sales revenue forecast

CeeJaySix

1. Divide actual revenue by index for the relevant year and multiply for index for year 1 - this will give you sales revenue at yr 1 prices.

2. Once you've done this there's a clear pattern, so you can easily establish yr 5 revenue at yr 1 prices.

3. Take yr5 revenue at yr1 price, divide by yr1 index and multiply by yr5 index to get the actual yr5 revenue.

racheyc

Thanks - that's great!