Using 2008 as the Base Year, the Simple Price Index

question 115

Short Answer

Using 2008 as the base year, the simple price index for an algebra book in 2009 was computed to be 105. If the price of the book was $50 in 2009, compute the price in the base year.

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Definitions:

Gross Profit Section

The portion of an income statement that shows revenue minus the cost of goods sold, indicating the profit made from selling goods before other expenses are deducted.

Merchandising Company

A business that purchases finished goods for resale, making a profit on the merchandise sold.

Income Statement

A financial statement showing the revenue, expenses, and profits or losses of a business over a particular period.

Freight-In

Freight-In costs are the shipping charges for receiving goods from suppliers, considered part of the inventory cost and included in the cost of goods sold when the inventory is sold.