I an Index Is a Convenient Way of Comparing Changes

question 16

Multiple Choice

i. An index is a convenient way of comparing changes for different variables, i.e., average income and food prices. ii. The concept of real income is sometimes called deflated income.
iii. Purchasing power of the dollar is determined by finding the inverse of the CPI.

• A) (i), (ii), and (iii) are all correct statements.
• B) (i) and (ii) are correct statements but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) (i), (ii), and (iii) are all false statements.

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Definitions:

Materials Quantity Variance

A measurement of the difference between the actual quantity of materials used in production and the standard quantity expected to be used, often reflecting efficiency in material usage.

Standard Quantity Of Hours

The set amount of labor hours estimated to be necessary for completing a task or producing a given amount of goods.

Direct Materials

Raw materials that are directly used in the production of goods, easily traceable to the finished product.

Materials Quantity Variance

The difference between the expected quantity of materials needed for production and the actual quantity used, valued at standard cost.