If the Consumer Price Index Changes from 120 in the Year

question 88

Multiple Choice

If the Consumer Price Index changes from 120 in the year 2009 to 126 in the year 2011, the average rate of inflation per year over this two- year period is approximately

• A)5 percent.
• B)3 percent.
• C)2.5 percent.
• D)1.5 percent.
• E)6 percent.

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Definitions:

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been sold.

Raw Materials Inventory

The total cost of all components and materials that a company has in stock and that are to be used in the production process.

Manufacturing Overhead Applied

The allocation of estimated manufacturing overhead costs to individual units of production.

Raw Materials Used

The total cost of all raw materials that are converted into finished goods within a reporting period.