Question 1 June 2012 paper — OpenTuition Forums

Aahmed55513y ago

My question is regarding Q1 A June 2012 F9, what I don't understand is the inflation of selling price and variable cost if we increase them by 4% and 2.5 % then I got different figures. Can you explain how they have allowed prices and v.cost with the inflation please.

Regards
Ahmed Bayat

John MoffatTutor13y ago#1

I do not know why you got different figures.

The sales revenue in the first year is 50,000 units x $25 x 1.04 (to inflate by 1 year).
The sales revenue in the second year is 95,000 x $24 x (1.04)^2 (to inflate by 2 years) and so on.

Similarly with the variable costs.

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