Suppose a Basket of Goods and Services Has Been Selected

question 77

Multiple Choice

Suppose a basket of goods and services has been selected to calculate the CPI and 2004 has been selected as the base year. In 2002, the basket's cost was $50; in 2004, the basket's cost was $52; and in 2006, the basket's cost was $54.60. The value of the CPI in 2006 was

• A)91.6.
• B)95.2.
• C)105.0.
• D)109.2.

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Definitions:

Actual Fixed Overhead Costs

The real costs incurred for fixed overhead during a specified accounting period.

Budgeted Activity

The planned level of output or activity for a specific period, used for planning and control purposes.

Labor Rate Variance

The difference between the actual hourly wage paid to workers and the expected wage, multiplied by the actual hours worked.

Labor Efficiency Variance

The difference between the actual labor hours taken to produce a good or service and the standard labor hours expected, multiplied by the labor rate.