Indexes stuck again

topcat
topcat Registered Posts: 452
in AAT Level 4 (Level 8 in Scotland)
Doesn't take me long to reach another road block does it :P

No idea at all how you work out the index to this even after reading the index chapter in the book

Any wizzardy on this is appreciated please A company has provided the following information:



January
February
March



Total cost
£64,500
£71,500
£92,050



Total quantity purchased
5,000kg
5,500kg
7,000kg



Price Index

260





Complete the table by inserting the price index figures for January and March,
rounded to the nearest whole numbers if necessary.

Thank you

Comments

  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
    The most important point to master is that the PRICE index is an index of the price per kg not the cost of all the kilograms purchased that month


    January
    February
    March


    Total cost
    £64,500
    £71,500
    £92,050


    Total quantity purchased
    5,000 kg
    5,500 kg
    7,000 kg


    Price per kg
    £12.90 per kg
    £13.00 per kg
    £13.15 per kg


    Price Index
    258
    260
    263


    I'm taking it for granted that you know how to calculate the price per kg
    Now that we know that £13.00 per kg has an index of 260 we can divide the index by the price. This gives us the multiple to convert a price to an index.
    The multiple here is 260/£13.00 = 20 per £1
    The price index for January is £12.90 x 20 = 258
    The price index for March is £13.15 x 20 = 263
    Sandy
    sandy@sandyhood.com
    www.sandyhood.com
  • SamiH
    SamiH Registered Posts: 179 Beyond epic contributor 🧙‍♂️
    http://forums.aat.org.uk/forum/for-student-members/student-discussion/technician-diploma/35571-base-index-question-for-financial-performance

    ;)
  • topcat
    topcat Registered Posts: 452
    SandyHood wrote: »
    The most important point to master is that the PRICE index is an index of the price per kg not the cost of all the kilograms purchased that month


    January
    February
    March


    Total cost
    £64,500
    £71,500
    £92,050


    Total quantity purchased
    5,000 kg
    5,500 kg
    7,000 kg


    Price per kg
    £12.90 per kg
    £13.00 per kg
    £13.15 per kg


    Price Index
    258
    260
    263


    I'm taking it for granted that you know how to calculate the price per kg
    Now that we know that £13.00 per kg has an index of 260 we can divide the index by the price. This gives us the multiple to convert a price to an index.
    The multiple here is 260/£13.00 = 20 per £1
    The price index for January is £12.90 x 20 = 258
    The price index for March is £13.15 x 20 = 263

    thank you great explanation :-)
  • topcat
    topcat Registered Posts: 452
    SamiH wrote: »
    http://forums.aat.org.uk/forum/for-student-members/student-discussion/technician-diploma/35571-base-index-question-for-financial-performance

    ;)

    thank for link also :)

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