The Practice of Increasing a Nominal Quantity Each Period by an Amount

question 54

Multiple Choice

The practice of increasing a nominal quantity each period by an amount equal to the percentage increase in a specified price index is called:

• A)a substitution bias.
• B)the Fisher effect.
• C)deflating.
• D)indexing.

Understand and apply concepts of currency conversion and exchange rates.

Apply ratio and proportion knowledge to calculate overhead allocations and refund amounts.

Evaluate and solve problems involving additional investments to maintain original investment ratios.

Calculate the required increase in resources to meet specified ratios.

---

Definitions:

Machine-Hours

An indicator reflecting the duration of machinery utilization during the manufacturing process, commonly employed in the distribution of manufacturing overhead expenses.

Manufacturing Overhead

Represents indirect costs involved in producing goods, including maintenance expenses, quality control, and equipment depreciation.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that vary directly with production volume, such as supplies and indirect labor.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as rent, property taxes, and salaries of permanent employees.