A widely acknowledged problem with using the consumer price index as a measure of the cost of living is that it fails to account for the introduction of new goods.
More about consumer price index and its problem-
- A more accurate indicator of a nation's standard of living than per capita GDP is the consumer price index or CPI.
- It is based on the total cost of a fixed basket of goods and services purchased by an average customer in comparison to the cost of the same basket in a base year.
- The CPI can get a precise assessment of the cost of living by including a wide range of thousands of items and services with the set basket.
- It's crucial to keep in mind that the CPI is an index number or a percentage change from the base year rather than a monetary value like the GDP.
- Because CPI is based on a fixed basket of products, the CPI does not provide an entirely accurate measure of the cost of living, despite being a convenient approach to calculate the cost of living and the relative price level over time.
- The bias against substitution, the introduction of new products, and quality variations are three issues with the CPI that should be mentioned.
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Income products.out products curve point
Answer:
$
Standard total overhead cost (0.5 hr x 25,000 x $3.29) 41,125
Less: Actual total overhead cost ($21,000 + $18,000) 39,000
Total overhead variance 2,125(F)
Standard overhead application rate
= <u>Budgeted overhead</u>
Budgeted direct labour hours
= <u>$115,150</u>
35,000 hours
= $3.29 per direct labour hour
Explanation:
Total overhead variance is the difference between standard total overhead cost and actual total overhead cost. Standard total overhead cost is the product of standard hours per unit, standard overhead application rate and actual output produced. Actual total overhead cost is the aggregate of actual variable overhead cost and actual fixed overhead cost. Standard overhead application rate is the ratio of budgeted overhead to budgeted direct labour hours (normal capacity).
Answer:
$4,280 under applied
Explanation:
Given that;
Estimated direct labor hours = 11,200
Estimated manufacturing overhead = $259,840
Estimated rate per hour = $259,840 ÷ 11,200 = $23.2
Actual labor hours = 10,800
Estimated overhead for actual hours
= 10,800 × $23.2
= $250,560
Actual overheads incurred = $254,840
Hence, actual overheads are under absorbed by
= $254,840 - $250,560
= $4,280
The investment option that the client should go with to pay the child's college expenses is a. treasury bills.
<h3 /><h3>Why should treasury bills be used?</h3>
Treasury bills have a short term lifespan of less than a year which means that they mature in a short period of time.
The investor can invest in treasury bills and be able to access them by the time the child starts in school the next year.
Options for the question are:
a. treasury bills
b. intermediate-term bonds maturing in 5 years
c. long-term bonds of blue chip companies maturing n 10-30 years
d. a mutual fund based on the S&P 500 index
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