When inflation has affected the costs or the cost driver,managers remove purely inflationary price effects by:
A)adding each cost to the price index.
B)dividing each cost by the price index.
C)subtracting each cost from the price index.
D)multiplying each cost by the price index.
E)multiplying each cost by the price index and subtract the cost.

Question

Quizplus · Accepted Answer

Dividing each cost by the price index adjusts for the inflationary effects and helps to determine the true cost for the business. This method ensures that the business is not overcharging customers due to inflation and also helps to accurately track costs.

When Inflation Has Affected the Costs or the Cost Driver,managers