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Hi
I cannot seem to calculate the inflation rates on the selling price and variable costs, i understand you have to carry over the inflation from the previous year but i cannot understand the figures they have got?!
Please could you help me?
many thanks
jemmaOk inflation rate is 4% and the selling prices for the next 4 years is:
25 24 23 and 23 …. what is the new selling price per year? And how would u calculate it?You are not really explaining your question properly.
If you are trying to say that the selling prices you have written are at current prices, then the actual selling prices will be higher.
The selling price in 1 year will be (1.04) x the current selling price.
The selling price in 2 years will be (1.04)^2 x the current selling price.
And so on.
However, that was just a guess at what you were trying to ask. If you meant something else then you are going to have to explain the problem better.
Firstly this is from the June 2012 paper.
To get the answers for the selling price, multiply the selling price by the demand and by 1.04 (to the power of whatever year you are calculating).
So for year one, it is 25 x 50 x 1.04 = 1300 (rounded to 1000)
For year two, it is 24 x 95 x 1.04 (to the power of 2) = 2466
etc
You do a similar thing for the variable costs. Does that make sense?
Thank u Neilsolaris …. I kept doin it but my last digit wouldn’t agree … thank u kindly
Which year did your last digit not agree? If the other digits were ok, maybe it’s just an issue of rounding? If the digit after the decimal place is 5 or higher, I round up the digit before the decimal point up to the next number. Usually they do this in the answers, but I’ve noticed that occasionally they don’t. I don’t suppose it will matter too much though.
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