When Computing the Cost of the Basket of Goods and Services

question 149

Multiple Choice

When computing the cost of the basket of goods and services purchased by a typical consumer,which of the following changes from year to year?

• A)the quantities of the goods and services purchased
• B)the prices of the goods and services
• C)the goods and services making up the basket
• D)All of the above are correct.

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Definitions:

Variable Selling

Costs that vary directly with the level of sales activity, such as commissions or shipping charges.

Administrative Expense

Expenses related to the general operation of a business, such as office supplies, management salaries, and utilities.

Fixed Selling

Costs that remain constant regardless of the volume of goods or services sold.

Direct Labor-Hours

The total hours worked by employees that are directly involved in the manufacturing process.