If the Price Index Was 90 in Year 1, 100

question 49

Multiple Choice

If the price index was 90 in Year 1, 100 in Year 2, and 95 in Year 3, then the economy experienced

• A)10 percent inflation between Years 1 and 2, and 5 percent inflation between Years 2 and 3.
• B)10 percent inflation between Years 1 and 2, and 5 percent deflation between Years 2 and 3.
• C)11.1 percent inflation between Years 1 and 2, and 5 percent inflation between Years 2 and 3.
• D)11.1 percent inflation between Years 1 and 2, and 5 percent deflation between Years 2 and 3.

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Definitions:

Activity-based Costing

A costing methodology that assigns overhead and indirect costs to related products and services based on the actual consumption of each activity.

Manufacturing Overhead

All indirect costs associated with the production process, including costs of materials, utilities, and maintenance that are not directly associated with the manufacturing of a specific product.

Activity-based Costing

An accounting approach that assigns costs to products or services based on the resources they consume, aiming for more accurate cost allocation.

Machining

The process of removing material from a workpiece using power-driven machine tools to shape it into a desired form.