Index Numbers – ACCA Management Accounting (MA)
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Sir, in exam do they give the equation or should we want to memorize it??
The only formulae given in the exam are those listed on the formula sheet in our free lecture notes 馃檪
sir the numbers 100, 108, etc. are these random numbers weve chosen?
They are given in the example that I created.
Just wanted to say how happy I am when I watch your lectures sir, they really ease the learning process !!! (btw was that a cat in the background at 14:38)
Thank you!
Thank you for your comment (and yes – a cat 馃檪 )
Finally index makes sense to me. What I like about your lectures are that you take very less time to explain the clear logic and purpose behind everything we are learning.
Whereas in other places, they are only good in educating how to calculate problems.
Sir, I didn鈥檛 understand one thing though, why cant we just take 1 quantity of each item in the shopping basket and calculate the total of their individual prices before converting them to their index version ? Why the total quantities are needed for each item? I feel it is unnecessary, and leading to the headache of Laspeyre and Paasche.
If the price of (for example) potatoes increases a lot, then if an average person buys 10 kg a month then the effect on people will be much greater than if they only buy 100gms a month.
why we took 2009 quantity in paasche method
For the 2009 index we use the 2009 quantities. For the 2010 index we use the 2010 quantities.
With Paasche we always use the quantities for the year for which we are calculating the index number.
Yes, I must agree with all these other comments. You’re really a fantastic teacher and I just want to say a sincere thank you for taking the time to create this content! Brilliant
Thank you for your comment 馃檪
Thank you so much, I’ve been struggling with this and you’ve explained it perfectly.
Thank you for your comment 馃檪
Hi sir, why didn’t we stick to the same base year for the chocolates in 2009 as we stick to the same base year in 2010 for example 2?
Which index number is used in the real world; Paasche or Laspeyre? And in the exam style questions, will we be given a choice on which index to work with?
Both are used (although Laspeyre is more common). You won’t get a choice in the exam – the questions will tell you which index they want you to use.
Thank you!