CA Foundation · Quantitative Aptitude · Index Numbers
A company's sales volume index (base 2020 = 100) increased to 156 in 2024, while its average selling price index (base 2020 = 100) decreased to 88 in the same year. The revenue index for 2024, calculated as a chained index, would be closest to:
The revenue index is the product of volume and price indices divided by the base index: (156 × 88) / 100 = 137.28. Although volume grew 56%, prices fell 12%, resulting in net revenue growth of approximately 37.28%.
- A137.28Correct
- B142.15
- C156.88
- D244.00
Explanation
Revenue index ≈ (Volume index / 100) × (Price index / 100) × 10000 = (156/100) × (88/100) × 10000 = 1.56 × 0.88 × 10000 = 1.3728 × 10000 = 137.28. Or simpler: 156 × 88 / 100 = 13728 / 100 = 137.28. Option 3 (244) is sum of indices. Option 2 and 1 use incorrect calculations.
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