2012 2013 -In 2012, Consumers in Dexter Consumed Only Books and Pens

question 32

Multiple Choice

2012 2013

-In 2012, consumers in Dexter consumed only books and pens. The prices and quantities for 2012 and 2013 are listed in the table above. The reference base period for Dexter's CPI is 2012. What is the inflation rate in 2013?

• A) 69 percent
• B) zero
• C) 31 percent
• D) 2 percent

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product cost.

Unit Product Cost

The total cost (both fixed and variable) associated with producing a unit of product, including direct materials, direct labor, and manufacturing overhead.

Absorption Costing

A pricing strategy that incorporates all expenses associated with production - including raw materials, workforce wages, and both fluctuating and constant factory overheads - into a product's cost.

Period Cost

Expenses directly tied to time that are not directly tied to the production process, such as administrative expenses.