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  • This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • March 5, 2019 at 2:23 pm #507747
    aishakhalid97
    Participant
    • Topics: 8
    • Replies: 5
    • ☆

    (This question is from ACCA practice tests and there are no answers to it.)

    Q)) Two years ago the price index appropriate to the cost of material X had a value of 120. It now has a value of 160.

    If material X costs $2,000 per kg today, what would its cost per kg have been two years ago?

    My working: 160/120 * 2000 = $2666.7

    Is my answer correct?

    March 5, 2019 at 3:19 pm #507777
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You have misread the question.

    It asked that the cost would have been two years ago. You are calculating what the cost would be now if the cost two years ago was $2,000.

    Given that the cost today is $2,000, you need to go backwards to work out the cost 2 years ago (which would obviously be lower and not higher :-))

    So what you should have done is take 120/160 x $2,000.

    March 5, 2019 at 4:17 pm #507804
    aishakhalid97
    Participant
    • Topics: 8
    • Replies: 5
    • ☆

    Thank you Sir !

    March 6, 2019 at 5:23 am #507919
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

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