Consternation Corporation Has an Agreement with Its Workers to Index

question 21

Multiple Choice

Consternation Corporation has an agreement with its workers to index completely the wage of its employees using the CPI.Consternation Corporation currently pays its production line workers $7.50 an hour and is scheduled to index their wages today.If the CPI is currently 130 and was 125 a year ago,the firm should increase the hourly wages of its workers by

• A)$0.04.
• B)$0.29.
• C)$0.30.
• D)$0.50.

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Definitions:

Variable Administrative Expenses

Costs that vary in proportion to changes in an organization's activity level, such as sales commissions.

Sunk Cost

A cost that has already been incurred and cannot be recovered, and hence should not influence future business decisions.

Sunk Cost

Costs that have already been incurred and cannot be recovered or reversed.

Model 240 Machine

A hypothetical or specific name for a machine, possibly denoting a particular model or type used in manufacturing or industrial settings.