If the Cost of Transportation and the Cost of Food

question 141

Multiple Choice

If the cost of transportation and the cost of food both increase by 30 percent, other things the same, how much is the CPI likely to increase?

• A)by about 3 percent
• B)by about 6 percent
• C)by about 9 percent
• D)by about 11 percent

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Definitions:

Spending Variance

Spending variance is the difference between the actual amount spent and the amount budgeted or expected to be spent.

Budgeting

The process of creating a plan to spend your money, setting forth projected revenues and expenses for a future period.

Planning Budget

A financial plan that estimates the revenue, costs, and resources required over a certain period, often used for guiding business strategy and operations.

Other Expenses

Costs not directly related to production or operations, such as administrative and marketing expenses.