The Price Index Was 320 in One Year and 360

question 227

Multiple Choice

The price index was 320 in one year and 360 in the next year.What was the inflation rate?

• A) 9 percent
• B) 11.1 percent
• C) 12.5 percent
• D) 40 percent

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Definitions:

Net Operating Income

The profit realized from a business's operations after subtracting operating expenses but before taxes and interest.

Variable Selling

Refers to the costs associated with selling a product or service that fluctuate with the level of sales activity, such as commissions and shipping charges.

Absorption Costing

A cost accounting methodology that absorbs all production costs, like direct materials, direct labor, and overhead expenses whether variable or fixed, into the final cost of a product.

Variable Costing

A costing method that includes only the variable manufacturing costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.