The Price Index That Measures the Cost of a Basket

question 132

Multiple Choice

The price index that measures the cost of a basket of goods and services bought by firms is called the

• A)industrial price index.
• B)producer price index.
• C)core price index.
• D)GDP deflator.

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Definitions:

Standard Amount

The budgeted or pre-determined cost of materials, labor, and overhead that is used as a benchmark for actual costs.

Variable Manufacturing Overhead

The segment of manufacturing overhead expenses that fluctuates in relation to the volume of production output.

Actual Output

The real quantity of goods or services produced by a company, as opposed to planned or potential output.

Labor Efficiency Variance

The difference between the actual hours worked and the hours that should have been worked, considering the standard labor rate. It measures labor productivity.