If the Price Index in Year 1 Is 115 and the Price

question 81

Multiple Choice

If the price index in Year 1 is 115 and the price index in Year 2 is 120, the rate of inflation between Year 1 and Year 2 is:

• A) 4.3%.
• B) 15%.
• C) 10.7%.
• D) 1.2%.

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Definitions:

Labour Cost

Labour cost is the total expense incurred from employing labor, including wages, benefits, and taxes, significant in assessing overall production costs or operational expenses.

Practical Standard

A level of performance or an expectation that is realistic and attainable under normal circumstances.

Labour Efficiency Variance

The difference between actual labor hours worked and the standard labor hours expected for the level of production achieved.

Direct Labour Standard

A benchmark for the amount of direct labor time that should be consumed in the production of goods or services, used for costing and efficiency analysis.