Dec 2014 past paper
Sales units 95k 100k 150k 150k
Sales price 25 25 26 27 Selling price inflation 4.2%
VC 11 12 12 13 VC inflation 5%
for the sales in year 1, I multiplied 25 by 1.042 and got 26.05 In year 2, I multiplied 26.05 by 1.042 and got 27.1441, but in year 3 when I multiplied by 1.042 again I got a different answer to ACCA's answers. I saw some students said it should 27.1441*1.042^3.
What does ^symbol means?
ACCA has 29.42 for year 3? How did they arrive at that answer?
Ask the Tutor ACCA FM
Selling price and variable cost inflation
6y ago#1What you have done would be correct if the selling price in year 3 had been 25 without inflation.
However the selling price without inflation is 26. So with 3 years inflation it is
26 x 1.042^3 = 29.42.
1.042^3 is the way of typing 1.042 to the power 3.
I do suggest that you watch my free lectures on this. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
Sign into reply to this topic.