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Forums › ACCA Forums › ACCA MA Management Accounting Forums › Index numbers application
I can calculate indices and do simple problems like “if index is 102 and the price was 20, what will be the price of index is 140”. But certain applications i simply can not understand. here is an example:
Month-Prod—OH———Price
———Units—Costs—–Index
Jan 10——-3352——-100
feb 10.5—–3479——-101
mar 12——-3860——-102
apr 9———3098——-104
may 9.5——3225——-105
jun 10.25—3416——-106
question: Use the hi-lo method o calculate the cost per unit in June’s prices
the hi is march and lo is april. is the question asking to adjust costs to june index? how do we do it?
regards
To adjust April’s costs to June prices, you divide by 104 (the April index) and multiple by 106 (the June index)
Use the same logic to adjust March’s costs