Suppose the CPI for This Year Is 133

question 92

Multiple Choice

Suppose the CPI for this year is 133.7.This number means that

• A)prices rose 33.7 per cent over the last year.
• B)prices rose 133.7 per cent over the last year.
• C)prices rose 33.7 per cent over the base year.
• D)prices rose 133.7 per cent over the base year.
• E)on average,goods cost $133.70 each this year.

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Definitions:

Prime Cost

The combined costs of direct materials and direct labor that are directly involved in the manufacturing of a product.

Direct Labor

The wages and salaries of employees who are directly involved in the production of goods or services.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of goods, such as utilities, rent, and salaries for managers.

Direct Materials

The raw materials that can be physically and directly associated with manufacturing the end product.