shunmas
03-11-09, 05:21 AM
Hi All !
Well I am doing a question, which covers inflation. The sales volume in units, average variable cost and fixed cost have been given for 4 years.
It also says that variable costs to be increased 4% per year and 3% fixed cost.
Now the main problem is: The fixed costs are 500,000. If we account for inflation at 3%, we will get $515,000 for Year 1. For next year, its has taken 6% and it is giving $530,000 in Year 2. NOW in Year 3, it is giving $546,000 and $563,000.
I dont understand how it has come to $546,000 and $563,000.
Your help will be appreciated.
Thanks
Well I am doing a question, which covers inflation. The sales volume in units, average variable cost and fixed cost have been given for 4 years.
It also says that variable costs to be increased 4% per year and 3% fixed cost.
Now the main problem is: The fixed costs are 500,000. If we account for inflation at 3%, we will get $515,000 for Year 1. For next year, its has taken 6% and it is giving $530,000 in Year 2. NOW in Year 3, it is giving $546,000 and $563,000.
I dont understand how it has come to $546,000 and $563,000.
Your help will be appreciated.
Thanks