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Index numbers application

Forums › ACCA Forums › ACCA MA Management Accounting Forums › Index numbers application

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.
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  • Author
    Posts
  • September 24, 2014 at 4:15 pm #196293
    mansoor
    Participant
    • Topics: 424
    • Replies: 542
    • ☆☆☆☆

    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

    September 25, 2014 at 7:04 am #196351
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54710
    • ☆☆☆☆☆

    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

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